"I think the majority of mainstream vendors — and their customers — have failed to recognize the pace and extent of change because they underestimate the weight of their own inertia. They acknowledge the need for change, but they’re

also conscious of the disruption and pain required to embrace it. So they act slowly and tentatively, hoping that if they wait long enough something will happen to make the change easier. What actually happens is that waiting makes

the change even more painful, and they’ll end up forced into it anyway by the competitive pressure from others who had the foresight or the opportunity to act when they chose not

to." - Phil Wainewright, April 11, 2006

1

The 80 Year Rule

2Rule of thumb: First 40 years of any technology is not that interesting; all the most incredible stuff happens in the next forty.

The Linear Time Rule

3We think that time is linear. It isn't. We will experience the last hundred years of developments in the next 20. Technology (ALL technologies) are accelerating on a double exponential curve. We're approaching the knee of that curve now.

1969

4First internet connection between three computers at DARPA

1970s

5Mainframes and mini-computers were centrally managed; data and applications at the center, terminals at the edge

1971

6first email sent

1980s

7Democratized and adaptable PCs; people brought their home PC to the office to do Visicalc; computing and applications are now "at the edge" on the PC

1990s

8Client/Server takes off; commercial internet takes off; computing at the center and the edge; applications at the center and the edge;

1994

9

"The Internet will never go mainstream"

- Time Magazine

10In late 1994, TIME magazine explained why the Internet would never go mainstream.

Microsoft "leaks" the "Internet Memo"

11Microsoft "leaks" the "internet" memo, builds IE, crushes Netscape

1995

12

"The INTERNET? BAH!” - NewsWeek, February 1995

13

Amazon, eBay, and Craigslist are born

14

1998

15

Sergey mis-spells Googol.Google is born.

16

2000s

17democratized and adaptable; user centric read/write world

2001

18

DOT-COM COLLAPSE

19party is over; IPO window is closed; NASDAQ falls off a cliff;

Nuclear winter

20VC funding dries up; innovation stops; internet businesses (B2B) keep going and making things efficient; 95% of the ASPs from the first round all die off - too few customers, too expensive infrastructure

2003

21We start to see some interesting thaw in the nuclear winter; cool startups; interesting things happening on the web again. But then people start saying some things that we don't really want to hear...

"The end of the enterprise software vendors?"

22

"Light, fast, cheap the new way to build"

23

"Enterprise software vendors ripe for disruption"

24

"Free software rules the world!"

25

"Open source will be the downfall of the establishment"

26

MySpace and del.icio.us launch

27

2004

28

Flickr launches

29Gaming company in Vancouver fails; casts around for something to do with its technology; asks users to help it figure that out; users like the photo sharing aspect and drive it in that direction; soon, they will have 70 million photos and be bought out for $35M

Web 2.0 conference(year 1)

Nobody notices.

30

2005

31

YouTube

32Two guys start a site intended for voyeurs. [Show email from Paul's slideshow,] Kleiner and Sequoia pour $30M into the thing with absolutely no idea how they will make their money back and they're freaking out. Once it takes off, it eats bandwidth at horrendous expense every month, up to $1M/month

Web 2.0 Conference (Year 2)And EVERYBODY notices.

33This is a big deal; the press hits hard; O'Reilly releases his infamous Web 2.0 Design Patterns essay on the internet

“...we must act quickly and decisively...The next sea change is upon us.” - Bill Gates,

October 2005

34Microsoft releases "services wave" memo; says that Web 2.0 is the next wave and that the entire company must turn on a dime as it did 11 years ago and shift towards this "services" delivery model

"We believe the first ten years (1995-2005) of commercial internet were a warm up act

for what is about to happen"- Morgan Stanley

35

8 BILLION

36By the end of 2005, eBay has conducted 8 BILLION API based web service transactions

2006

37

Q1 2006

38Bernard tells SKO sales people about the new strategy including Web 2.0

MySpace is adding 250,000 users PER DAY

39

1 BILLION peopleon the internet

40

2 BILLIONmobile phones

41

Broadband penetration hits 30% in the US market

42

Q2 2006

43the Enterprise Software market is in chaos, buffeted by many different forces and change is accelerating. **Use Software 2006 and Sandhill Group documents to articulate the landscape

50 million blogs exist - some of them HAVE to be good

44

Software 2006 conference:

45• Software 2006 happens - trumpets Web 2.0 as a fundamental disruptive force in the enterprise•• Ray Lane, former Oracle executive and now a venture capitalist with Kleiner Perkins Caufield, spoke at the same conference where he stated categorically:

“Web 2.0 will get really profitable when it is used in an enterprise context” – M.R. Rangaswami

“There are two paths to long-term survival for todayʼs enterprise software companies. They problem is that very few companies are heading in the right direction...There is a new kind of software Darwinism going on. The harsh reality is that over the next 5 to 10 years, most of todayʼs software providers will not fare very well. The only way for enterprise software suppliers to survive this wave of industry evolution is to innovate and/or dominate. And 2006 is the year to get started.”- Ray Lane, Software 2006.

He said the industry is undergoing a "quiet but dramatic revolution," driven by SaaS, open source and SOA architecture. According to a survey of CIOs by McKinsey & Company in partnership with the Sand Hill Group, software will go from 30 percent of the IT spend this year to 35 percent in 2008. A second theme is Web 2.0 meets the enterprise. "Web 2.0 will really get profitable when it is used in an enterprise context," Rangaswami said. The final theme: Creating a healthy ecosystem, in which the software industry prospers. That's more wishful thinking than a theme.

o Web 2.0 for the Enterprise: “Web 2.0 for the Enterprise. As in previous innovation cycles, whenever multiple point capabilities converge – such as wireless, pervasive broadband, and online collaboration – many new applications become possible. In these cases, consumers tend to adopt the new services and products before the enterprise, but in the end the enterprise market is usually far larger and more profitable. We believe that much of the hype around “Web 2.0” for consumers – with its rapid innovation in content (e.g., blogs, wikis, user editing and tagging), tools like search, and services like content hosting –heralds a much larger opportunity to put these innovations to work in the enterprise.”

"“The old days are not coming back, and it will never be the same – the landscape is

shifting...Business models that include spending 50 to 60 percent of revenues on

sales and marketing or 25 percent on research and development...are over.”

46

$1 million each

47

Platt/MS: 5 guys x $1M each building little mashups

"“Suppliers are no longer in control, and buyers are not happy with the products,

services and relationships they have with the software providers." - McKinsey Report

48

“Spot the Dinosaur” runs in The Economist, April 1, 2006

49• Microsoft makes more than half of its $40B/yr from Windows and Office = $20B+ • They have 2M subscribes to XBox Live [should I list XBox Live as across multiple devices?] • MSN has captured "a small share of the roughly $10 billion online advertising market." • [It's $10B at this point? Seems low.] • There are only three ways to get paid: • Ads • Transactions • Subscriptions

Q4 2006

50

$7.3B

51Microsoft commits $7.3B in 2007 for R&D in SaaS, Search, and all other initiatives

"The World's Information is Getting Organized and

Monetized" - Mary Meeker, Morgan Stanley

52 Meeker: Mary Meeker, Morgan Stanley: The State of the Internet Part 3

* Overview of State of the internet can be summarized in this sentence: "The World's Information is Getting Organized and Monetized" * Powerpoint can be found here * Highlights: o The Top 5 companies are worth 46% more now than they were worth in the Year 2000: The Top 5 Global Internet Market Leaders have gone from $2B market value (pre 2000) to $178B (peak in 2000) to $32B (trough in 2002) and all the way back up to $259B (Nov 2006), which is 46% higher than their last peak. o It's tough to succeed: ~2% of technology companies have created ~100% of net wealth; on average, 2 companies have 1000% gains per year o Users / Usage — Yahoo! has base of 418MM+ unique monthly visitors (+19% Y/Y growth) o Customer Acquisition — Google now has 500,000 - 1M advertisers and they're making them more money all the time through more effective targeting and metrics. o Commerce / Payments — PayPal has 123MM accounts, (+41% Y/Y, CQ3); Shopping.com has 40MM+ products in 325+ categories o Advertising — 8% of total US advertising online in 2006E growing to estimated 13%+ within 5 years - Google + Yahoo! = key drivers + beneficiaries o Significant targeting / conversion improvements (related to technology improvements + data leverage) — could bolster annual global revenue per unique user of $9 for Google (+42% Y/Y) and $10 for Yahoo! (+29% Y/Y) 2-3x in next 5 years o Personalization — Recommendation engines improve monetization – examples include Amazon.com + Yahoo! Music o Recommendations systems getting better. + [As pointed out in The Long Tail, as you address more niches, you get more noise (stuff you don't want) and the way to sift through that noise is with filters such as recommendation systems. As the volume of potential purchases, songs, websites, etc. increase, the way to find what you want is through better filtering and recommendation systems. o Communications/Telephony: Skype would rank #3 in the world for telecom providers (behind China Mobile and Vodafone). It may still have the title of "fastest product ramp in history". Skype carries approximately 7% of all global cross-border calls and that should double in the next year or two. o Video: It is estimated that approximately 60% of internet traffic may be Peer to peer filesharing of "unmonetized" video (read that as it could be illegal or it could be legal but just not have an economic transaction attached to it.) o "Local" is getting to be important: Buying your software from Russia or China might be okay, but if you want to buy bagels, you need to find the bagel shop near your house. Google and eBay local classifieds continue to expand. o Communities are exploding: Myspace, YouTube, Flickr, CyWorld are all exploding. Blogs continue to double every 7 months (now at about 57M blogs) + [I like Matt Mullenwegg's quote on Technorati (the blog search engine): "There are over 50 million blogs. SOME of them have to be good!"] + [See further down for the interview with Hyun-Oh Yoo from CyWorld - they're awesome!] o Social media is at the very beginning of the curve + [Digg, Reddit, NowPublic, and many more sites are springing up to take advantage of people's energy and desire to be involved in reporting the news (and fact-checking on the major news sites.] o Mobile continues to ramp up quickly. The shocking statistics from the presentation included American Idol receiving 63M votes (via mobiles + internet) in the final 4 hour round. + [I'm not sure which is more shocking. That 63M people were watching that ridiculous show or that 63M people were able to vote using a system that didn't crash. I think they're equally unbelievable.] + [I'm also intrigued by this voting thing on phones. We're starting to see some interesting uses of phones that fit the form factor: GPS-enabled mapping, instant messaging, voting.] + [For another interesting company to look at in this area, a friend of mine, John Merrells, has launched Embrace Mobile, which will specialize in very focused mobile applications that can be run over SMS. * User Generated Content based sites have moved into the top 15 global websites (based on number of unique visitors per month). Wikipedia, MySpace, and YouTube drove those numbers. o [That means that the principle "users can (and will) generate more content at the edge than you can at the center."] o [Some other interesting notes are that the growth rates of Wikipedia (110% y/y), Myspace (303% y/y) and YouTube (2662% y/y) mean that by next year, they will likely dominate the list.] o [Another interesting side note is that the only other site on the list with a relatively high growth rate is Apple at 38% y/y. I would think that bodes well for their continued success selling hardware and music.] * North America is becoming less dominant on the internet: NA will go from 36% of users in 2000 to 20% of the internet in 2007. * Broadband penetration has finally hit the 25-30% "sweet spot" o [Who defined this as the sweet spot?] o [Does this mean that this is a tipping point that enables new services to be built upon it?] o [In case Americans feel smug about this, their broadband penetration should be compared to Korea which is at 60-70%] * Global Mobile 2.5G/3G penetration has hit the 30-35% "sweet spot" o [Again, what does that mean? They didn't really explain that.] * Global Internet Thesis: We have had 10-15% user growth this year; 20-30% usage growth (time/pages/etc.); and an increase of 30%+ in monetization. * Online text/music/video - paths to monetization: o Text: + Newsgroups (usenet) turned into Yahoo Directory which led to $$$ # [I don't understand that transition. I don't get how Usenet converted to Yahoo Directory...] + Directories turned into Search (Overture, Google, etc.)

Web 2.0 Summit 2006 Summary

53Web 2.0 Summit 2006 / Summary 100,000 foot viewby Troy Angrignon on Mon 20 Nov 2006 12:26 PM PSTHere are my summary thoughts on the 3 day Web 2.0 Summit 2006 in SF, CA

There were some overall themes that seemed to prevail in the sessions I attended and I'm going to try to capture them here in no particular sequence. It's one thing to have sat in all the sessions or to review all of the notes but another to reflect on all that was said and see what can be summarized from it all.

* Web 2.0 is real. In fact, it's even more important than when Microsoft had their epiphany about the internet ten years ago. * We're at the beginning of the ramp for things like social media and mobile; * This year, we grew users 10-15%, usage 20-30%, and monetization 30+% and that looks like it will continue; * video has surpassed text everywhere all the time; * Internet Advertising is still under-represented so ad spend will shift from 8% of the total spend to about 15% of the total spend and will make this transition very quickly. * It's now possible to build an entirely virtual company by outsourcing every single component of it; * Application development speed continues to leap ahead radically; * find and go towards the large white spaces; * there is lots of capital out there; ideas and good teams are the limiters; there's no excuse for not raising money right now; * web services and mashups are going to explode; * find passionate users, let them drive your products and your business; * In fact, let them help you BUILD your product if possible; * Build your products so that people either love them or hate them; don't aim for the zone of mediocrity. * LOVE your users; * To keep good people, ensure they're passionate about what they're doing, give them the ability to somewhat drive their (and your) success and innovation; engage them in decisions; * Realize that you can build things now collaboratively across the web in ways that were not possible before; * Do something bold that changes the game: o Goldcorp gave up their sacred data and $500K to make $3.4B in revenues o Bob Parsons cancelled the GoDaddy.com IPO because the analysts were too annoying; o Amazon wants to start running your businesses because frankly, they can do it better, cheaper, and faster than you can by a factor of 100x. * the better your product, the less you have to use traditional marketing; * focus on niches; * we're at the beginning of the curve on immersive environments and they will play a larger and larger part in our economy; * help people make money on top of your platform; * Watch the cashflow (daily!); it's more important than profits (for a smaller company); * Making money is better (and way more important) than finding investors * Adapt quickly * Create passionate users who will help you create your business * Listen to yourself; listen to your customers; don't listen to analysts; never listen to the doubters. * measure what counts but remember that "not everything that counts can be measured, nor does everything that can be measured count." (be careful what you measure); * operational excellence can be a a defensible long-term strategy, and significant point of differentiation; (Microsoft, Amazon, Fedex) * Profit or size? o Most people: make it profitable right off the bat; then build with revenue as fast as possible; o Bezos: go for size! * On finding the next opportunity: o Calcanis/Dmitry: stay focused on your original business! o Bezos: Always keep exploring down dark tunnels for new business opportunities! * ecosystems beat platforms beat applications beat features; * there was a lot of contradiction regarding how companies should or should not start small. I think it shows that there is no right answer. There will be a plethora of small companies and others will choose to get the funding to get big fast as we did in Bubble 1.0;

Overall, the three days were very worthwhile. I met some fantastic people and am looking forward to attending the Web 2.0 Expo in April 2007 that will focus much more heavily on the tactical details of Web 2.0 deployment.

UK Mobile telco launches "Open Garden" and fixed rate

mobile broadband

54Major milestone: Major British mobile tel provider moves from walled garden and pay-per-use pricing to "open gardens" and flat-rate internet access. Skype's Niklas Zennstrom says 3g broadband "has now arrived."by Troy Angrignon on Mon 20 Nov 2006 01:15 PM PSTUntil now, the mobile phone networks have been walled gardens with pay-per-use data plans and in order to build a telephone application, you had to customize it for every phone and every model and every carrier. It has been frankly a nightmare and has even prompted Michael Arrington to comment at The New New Internet conference in Virginia this summer that companies "shouldn't bother with mobile in the U.S. - it's a fragmented nightmare and only SMS works properly and that's just barely."

Well...a major structural crack just occurred in Europe and with any luck it will be the crack that was heard around the world and that will hopefully precipitate a cascade of reaction from other providers to follow along.

Hutchison 3, a telco provider in the UK, has just announced a fixed rate pricing model and an "OpenGardens" strategy. This fixes two of the major structural flaws in the mobile sector. In a perfect world, this will drive a chain reaction and like the Berlin wall, this would cause flat-rate pricing and open gardens to flourish across the planet, creating a massive open platform upon which innovation would explode across the 2 billion phones currently on the planet.

Back to reality. What will this mean really? I have no idea. But we should all watch this one very closely.

(Thanks to Ajit Joakar for the tip.)

Leave Comment | Permanent Link | Cosmos

IBM is going to spend $100M on Second Life and immersive

environments!

55IBM is going to spend $100M on Second Life and immersive environments!by Troy Angrignon on Tue 21 Nov 2006 10:03 AM PSTIBM rocks. They keep doing cool things. They're spending a ton of money on wikis and light-weight scripting languages. And they asked 100,000 of their customers, partners, and employees to develop an innovation pipeline. Now they are spending a reported $100M (according to BusinessWeek) in an effort to capitalize on Second Life and other immersive environments. Awesome.Leave Comment | Permanent Link | CosmosMonday, November 20

Forget Accenture, McKinsey, and EDS - let's go get 3,000

MBA students to help us

56Screw Accenture, McKinsey, and EDS - let's go get 3,000 MBA students to help usby Troy Angrignon on Thu 23 Nov 2006 10:04 AM PSTCNN has a great article on how companies like Amex, GE, and Whirlpool asked 3,000 MBA students to help them with some of their critical and strategic issues around innovation. Worth a read.Leave Comment | Permanent Link | CosmosTuesday, November 21

WHAT IS WEB 2.0 AND WHAT DOES IT MEAN FOR

OUR BUSINESS?

57I read, write, think, attend conferences, and generally just hang out with the 2.0 crowd as much as possible to get the bigger picture, to see how it applies to our business;

Web 2.0: "a set of economic, social, and technology trends that collectively form the

basis for the next generation of the Internet - a more mature, distinctive medium characterized by user participation,

openness, and network effects.” - John Musser

58There are MANY definitions. This one is pretty good.

KEY DRIVERS

59In his book, The World is Flat, Thomas L. Friedman outlines the three great eras of globalization:• Globalization 1.0, from 1492–1800: a period when the world shrank from a size large to a size medium;• Globalization 2.0, from 1800–2000: a time when multinational companies were the dynamic force driving global integration; • Globalization 3.0 began around 2000 and is characterized as a time when individuals have newfound power to collaborate and compete globally.

Given that Friedmanʼs era “Globalization 3.0” happens around the year 2000 and that it is characterized by the individualʼs ability to collaborate and compete globally, it makes us conclude: Globalization 3.0 = Web 2.0! (He just didnʼt know anything about Web 2.0 so he didnʼt talk about it.)

The Economic drivers of 2.0: Software prices, processing costs, and storage costs have all dropped through the floor. If you outsource, offshore, or ʻcrowd-sourceʼ, your people costs go down too. And by the way, $400 billion of traditional advertising spend is looking for a new home on the Internet.• Global customer base• Customers are "always on" (broadband)• Customers are connected (by mobile)• Customers are engaged (nearly 50% of U.S. adults have contributed online.)• Costs of production continue to decrease• Online advertising is becoming a real revenue opportunity (as $500B/yr offline shifts to online)

The Social drivers of 2.0:Our innate desires to procreate, build community, nurture, collaborate, communicate, love, hate, and look for answers to our existential angst, combined with the fact that the threshold for participation has now been lowered, have resulted in an explosion of creativity:“...one study found that only 40 percent of the web is commercial. The rest runs on duty or passion...the deep enthusiasm for making things, for interacting more deeply than just choosing options, is the great force not reckoned 10 years ago. This impulse for participation has upended the economy...” - Kevin Kelly, “We Are The Web”o Desire to createo Desire to be socialo Desire to share knowledgeo Desire to serveo Desire for self-actualizationo Maslow's entire hierarchy with Esther Dyson's additions (shelter, food, mobile phone!)o Desire to learn = Mix / Build on / Extend = Standing on the shoulder of giants. Rapid reuse and building upon of previous knowledgeo Desire to mate: leads to online datingo Desire to find and belong to communityo Desire to express identityo Desire to nurtureo Desire to collaborate = desire for community + desire to create

The Technological drivers of 2.0: Rapid technological change isnʼt anything new, but like a tornado, Web 2.0 is occurring now due to the convergence of a ʻperfect stormʼ of technological factors:• PCs for the Masses: Inexpensive desktop computers are everywhere;• The development and wide public adoption of the most recent versions of Internet Explorer and FireFox are providing a stable platform for web applications;• Broadband Internet access is now ubiquitous (greater than 35% of U.S. households). • The arrival of tools such as AJAX that make it easy to create web applications that work just like desktop applications.o Ubiquitous Broadband• >70% of households in S. Korea) (Morgan Stanley Oct. 6.2005.) • 35-30% of US households • ~10% of global wireless have some form of broadband (so it may be too early to be driving any significant web 2.0 change but will certainly benefit from it.)o Software is free (a lot of it...except yours) (PK)o Cheap Hardware• Processing costs are plummeting • Storage costs are plummeting: • 1980: $183,000/GB • 2005: $1/GB (!!)o People costs are plummeting (off-shoring) (PK) o Company creation costs are plummeting (Joe Krause) • Going from idea to launch for Excite.com (1985): $2,000,000 • Going from idea to launch for Jotspot.com (2005): $100,000 o Micro-payment services now work (Paypal) o Micro-advertising services now work (Google) o Micro-pricing of content now works (Google)

BUBBLE 2.0?

60It probably is a bit of a bubble, but bubbles are not all bad. Carl Haacke, author of Frenzy: Bubbles, Busts, and How to Come Out Ahead wrote in his short article “5.5 Myths About Bubbles” that bubbles occur all the time and that they are part of normal economic function. Further, he clarifies how bubbles that are “based on new technologies like the Internet or new market regions like China, are the driving force of capitalism...They finance innovation, change and accelerate learning about new opportunities.”

Another key point that has been left out of most of these articles is that back in 1995–2000 during the dot.com boom, companies had the option of taking themselves public through an IPO. That contributed significantly to the wild stock market spike. It was a HUGE bubble in terms of total market capitalization. For a variety of reasons, the IPO route is no longer as available to entrepreneurs, so most startups are using the “GAMEY” plan (“weʼll build this thing and then flip it to Google, AOL, Microsoft, EBay or Yahoo!”).

Since these startups are not flooding the stock exchange, they are not causing a public market spike as they did in the late 1990s. The lack of a spike in the public stock exchange is one indicator that, despite the hype surrounding Web 2.0, this is not as large of a bubble and that it will not impact people in the same way as the last one did when things collapsed and decimated so many peopleʼs life savings in the process.

Dr. Paul Kedrosky, venture capitalist and blogger, said it best at the Vancouver Enterprise Forum in Fall 2005:

“Maybe there is a bit of a bubble but who cares if a whole bunch of companies innovate, try things and then fail? Theyʼre super capital-efficient anyway so itʼs not like theyʼre wasting a bunch of money. And weʼre getting the benefits of all of this innovation! Itʼs the economy, stupid!! More is MORE!”

"It takes a lot of dead bodies to fill a swamp" (PK)

So, whatʼs the summary? Yes, there is hype, yes, it may be a bit of a bubble, but thatʼs part of our normal economic cycles. And despite the fact that itʼs sort of bubble-like, real things are still happening, real industries are still being disrupted, and real opportunities exist...so who cares? And the truth is that it probably is a bit of a bubble, but bubbles are not all bad. Carl Haacke, author of Frenzy: Bubbles, Busts, and How to Come Out Ahead wrote in his short article “5.5 Myths About Bubbles” that bubbles occur all the time and that they are part of normal economic function. Further, he clarifies how bubbles that are “based on new technologies like the Internet or new market regions like China, are the driving force of capitalism...They finance innovation, change and accelerate learning about new opportunities.”

“Web 2.0 is the air for the next bubble” – Paul Witherow

61

"It takes a lot of dead bodies to fill a swamp" - Paul

Kedrosky

62

BARRIERS

63Barriers to understanding Web 2.0: (Dion)

• The Wall of buzzwords• the Wall of Hype• The wall of complexity• The wall of signficance (how significant is this really?)• the wall of ignorance: most people donʼt even know what a blog is yet, let alone any of this stuff!

VALUES

64

Openness / transparency

65 Openness is affecting licensing, communication, and even product development and service. This does not necessary mean open source, although that might be the case. But it means that there is a tendency towards openness and transparency where it is possible. This extends to things such as the increase in the use of Creative Commons licensing and the phrase “some rights reserved.” It means that people expect companies to speak more plainly and openly about what is going on with their products and services. And it means that companies are now inviting their ecosystem stakeholders into their product development processes.

trust

66

respect

67respect for the users. This plays out in a variety of ways such as moving from “lock in” to “love in”, from controlling data (and users) to trusting users as partners and equals. This means trusting your users to generate content, monitor their own community, help you design your products, hack your product, remix your data, mashup your application, develop your documentation, and help you with your business and product strategy.

“Love In” is the new “Lock In”Question(s): Is a key part of your business strategy focused on “locking in” your customer? Put yourself on the other side of that table. How do YOU feel about being locked in to anything?Old Thinking: Lock-in is a respected and necessary means of retaining your customers. This comes in particularly handy if your product is bad or doesnʼt work well or your service is awful. After all, the customer canʼt leave!New Thinking: “Love In” is the only way to truly keep your customers. Focus your efforts not on coercing your customers to stay against their will but on giving them such incredible value, easy to use products, and high levels of satisfaction that they become your biggest, most vocal, and most passionate sales force. Example(s): Any Software as a service provider is automatically more familiar with “Love In” because their clients can leave at any time and just stop paying the monthly fees. This behaviour is most often seen in the smaller Web 2.0 applications that have no protection from customer churn OTHER than passion and loyalty of their audience base (otherwise known as their fan club.) Lesson(s): R-E-S-P-E-C-T.Tags: Long Tail, recommendations, collaboration, algorithm, velocity

DESIGN PATTERNS

68

Collective Intelligence = sometimes a crowd is smarter

than an individual

69User generated content + the ability for the group to be smarter than the individual

User-generated content: Your users can generate BETTER content FASTER than you can.Question(s): How could you serve your customers or stakeholders better by letting them help you? Old Thinking: As the creator of a product or service, it was incumbent upon you to create everything that your users might need.New Thinking: Your users know your product better than you do. And there are millions of them (hopefully). And for their own variety of reasons, they will often generate content to share with their colleagues as a way of building or establishing reputation in their community.Example(s): eBay is 100% user generated content. So is Craigslist. So is Digg. So is NowPublic. It has been estimated that 40% of the content on the web is non-commercial in nature. [canʼt find this reference.]Lesson(s): Give your stakeholders the tools to generate content and get the hell out of their way.

---

Database of intentions: Database of Intentions: When you track every single thing a person does online, every query, every request, you end up with a picture of their desires, wants, needs, and drives – something that they may not even explicitly recognize.Questions: Do you track what your users do - wWhere they go, which features they use, how long they stay, what they ask for?Old Thinking: Build an application. Ship it on CD. Forget about it. Build another one.New Thinking: Build something. Instrument it heavily so that you know what people are doing with it. Watch them. Learn from them. Begin to understand the patterns of their desires and goals and motivations and dreams. Example(s): If you take every single Google or Yahoo or MSN search that you have ever made and look at it in a time sequence...what would it say about who you are or who you aspire to be?Lesson: When software is hosted (not downloaded or shipped), you can learn more about your users than you ever thought. Tags: Attention trust, Usage pattern data

Data is the next "intel inside" = get some data and make it

richer!

70Free Your Data: Give up control of your data, and let people connect to it and build on it. This is your new source of wealth – hard to recreate databases that you didnʼt buildQuestion(s): Do you fiercely guard your data? Is it considered more precious than the crown jewels in your company?Old Thinking: Proprietary data is the source of our wealth.New Thinking: Our data plus your data in your application means that there will be an explosion of innovation and we may gain a LOT more customers for our data. Furthermore, if we allow people to build on our data, pretty soon we have a very hard to recreate data source with top-notch data quality.Example(s): Amazon bought their ISBN data from a third party vendor. Then they let their customers build on that database. Their database is now better than the original vendors database. Similarly, Google bought Keyhole (the people behind Google Earth) and gave away the maps. Innovation around global mapping has exploded. Lesson(s): Closed data is bad. Open data with APIs and user modifications is brilliant.Tags: Data, Control, Community Data, APIsLicensing is shifting from closed to open: from “all rights reserved” to “some rights reserved”Question(s): How closed are you? What is your worldview – do we live in a universe of scarcity? Or abundance? Do you think that enclosure and property rights are the way to wealth? Old Thinking: Develop your intellectual property. Enclose it with as many layers of intellectual property protection as you can. Defend it to the last. Or else do not protect it, but do keep it as a “trade secret” and hope that people donʼt figure it out on their own. This world view is based on enclosure of property rights as a source of wealth over time.New Thinking: Create intellectual property and then share it with the world. Give some or all of it to the open source community of which you are a part. Share it with others, including your competitors. This worldview is based on the principle that the real money is made not from licensing, but through fees elsewhere in the product cycle. Rapid, widespread sharing of IP lowers the cost of innovation and product development for all players, leaving more money for differentiation in marketing, distribution and service.GOLDCORP!!

Innovation in Assembly =Make small chunks and hook

them together with other small chunks

71APIs, RSS, iCal, Alerting, etc. Monolithic apps and now micro-apps all connected (not either/or, AND).. Micro-chunking of the internet into smaller granules

Rich user experience = Make it suck lessthan it does now

72Currently AJAX, but that will go away and be replaced with other things like Apollo

Perpetual Beta =We’re NEVER fixing

that bug but you get a new feature tomorrow!

73Just what it says; always crappy; always mutating; but hey, you get a new app every day!

Software above the level of the device

74iPod + PC/Mac/iTunes + iTunes Music store; Last.fm player + Last.fm server; Web as platform: Web as Platform: The desktop operating system is (sort of) dead and the Web is the only platform that really mattersQuestion(s): Are you still building desktop applications? Why? Can you make them more interoperable with your web-services? Do you HAVE web services?Old Thinking: If you wanted to build an application, you would look for your target audience, and then prioritize which operating systems to build in what sequence. Each operating system had unique heterogeneous complexity issues that increased your coding and testing requirements exponentially.New Thinking: The web is the platform for the application, not the operating system. Example(s): iTunes, Xbox, Salesforce.com, last.fmLesson(s): Stop building for the desktop. Build for the web only. Or build across all devices (which might still require a device specific client application.) If you can build for the web only, you radically simplify your code base, and you simplify the number of variables (since youʼre building for a single data center and not heterogeneous environments.) But donʼt do this blindly. Examine each application on a case by case basis to see if it makes sense for you and for your customers.Tags: Web as Platform, Software Above the Level of Device

Mobility: all features and applications will be mobile

Long Tail: You may make more money in the Tail than in the

Head.

75Question(s): Does your business map to Long Tail economics? Do you have a few markets of millions? What if you could ADD a million markets of a few and make good profit doing it? Are the assumptions that you hold so dear actually wrong now that self-service and recommendation engines exist?Old Thinking: We will serve “several markets of millions” because thatʼs the only way we get economies of scale – by treating all of the customers in that customer segment the same way. Smaller markets just arenʼt worth it because “In the tyranny of physical space, an audience too thinly spread is the same as no audience at all...Hit-driven economics is a creation of an age without enough room to carry everything for everybody. Not enough shelf space for all the CDs, DVDs, and games produced. Not enough screens to show all the available movies. Not enough channels to broadcast all the TV programs, not enough radio waves to play all the music created, and not enough hours in the day to squeeze everything out through either of those sets of slots.” New Thinking: We can now also serve “millions of markets of several.” Because our customers can find us, buy our product, learn how to use our product, and upgrade our product (without our intervention), it is now profitable to go down “into the tail” to find customers.

Example(s): As of October 2004, Amazon.com made 57% of its revenue off of product in the Tail (books that are unavailable in physical bookstores.) eBay is mostly tail – niche and one-off products. Salesforce.com has an average of 19.5 users per deployment. Lesson(s): Make your system self-serve by keeping the thresholds low for customers, partners, vendors, to join in. Use web-marketing (search is one of the cheapest marketing costs out there), self-serve purchasing, self-serve training, and ongoing self-administration. Build recommendation systems that drive users from the head into the tail (“If you like this top 10 book, youʼll also like this obscure but relevant book.”) Tags: Self-Service, Long Tail, Cost of Marketing, Cost of Sales, Cost of Goods Sold, Revenue growth, Recommendation Engines

The Long Tail:• “In the tyranny of physical space, an audience too thinkly spread is the same as no audience at all.”• Rule 1: Make everything available.• Rule 2: Cut the price in half. Now lower it.• Rule 3: help me find it (use systems to help people find things in the long tail.)

Filters and recommendation systems make the long tail work: Recommendation systems can make your users more satisfied and can make your business a lot more money.Question(s): Do your users come to your site or use your applications and think to themselves, “Wow, how did they know I needed THAT piece of information or wanted to do THAT?” Itʼs just like magic!” Old Thinking: Using simple pattern-matching is good enough (“other users who bought X also bought Y, would you like Y too?”)New Thinking: Recommendation engines are complex multi-variable analytics. And they can make you a LOT more money from your users if they are designed well and used in the correct way.Example(s): Amazon.com has very advanced recommendation engines that use multiple variables from the user and from the information coming from other users to dynamically adjust its recommendations over time. Lesson(s): If you have a system where this is applicable, hire yourself some statistical analysis geniuses. Ask them to solve this problem: “optimize our recommendations so that we generate the most total profit from each customer.”Tags: Long Tail, recommendations, collaboration, algorithm, velocity

Lightweight business and cost effective scalability

76Craigslist 22 people, competes with the other media giants that have 15,000 people; Google has 450,000+ commodity boxes - they are one of the top 3 PC manufacturers!!;

Self-Service

77 is one of the major reasons it is possible to make money in the “Long Tail.”Question(s): How self-serve is your organization?Old Thinking: We canʼt sell to the Long Tail because our cost of doing business there is too high.New Thinking: Our users find us online, buy our product or service without talking to sales people, learn how to use our product by watching our tutorials, chatting on our forums, and collaborating with other users. Example(s): By fall of 2005, Doubleclick had 2,000 advertisers through their very manual process of on-boarding new customers. Google had around 200,000 advertisers . Lesson(s): Examine your entire product lifecycle. Rebuid your systems so that people can find, acquire, use, and retire your product, without ever talking to your people.Tags: Self-Service, Long Tail, Cost of Marketing, Cost of Sales, Cost of Goods Sold

Self-moderation and self-ranking are important keys to self-service (and low cost delivery of your offerings.)Question(s): Are you still moderating your community manually? If so, how can you possibly scale up? You CANʼT.Old Thinking: We will allow users to use our system but since they are an unruly mob, we must moderate them, control them, and decide who can stay and who must be sanctioned.New Thinking: It turns out that people are quite capable of moderating themselves and also ranking the people and information around them for quality.Example(s): In most social networking sites, there are mechanisms for people to flag material and other users for things such as “incorrect category”, “XXX material”, or “abuse of terms”, or “Lesson(s): Build self-moderation and self-ranking into your communities alongside self-service for payments. It allows you to manage large numbers of users without the extra bandwidth of having to monitor everything. This equals lower costs of administration and cost of goods for hosted applications. And that equals higher profitability. Tags: Self-moderation, Trust, Self-Ranking, Online Community, Social Network, Self-service

Search = Find = Buy = $8.50

7838% of new customers are acquired by search!!! (Meeker)

WHAT IS ENABLED?

79

Collaboration

80

: the first theme is about people working together, collaborating, to create software, content, communities, art, music, literature, and a multitude of other things. Web 2.0 tools and applications

support this type of interaction at their core.

Conversation

81

There is a conversation happening and it’s not just happening in your corporate website forum. It is happening on blogs. It is public conversation about politics, business, social issues, and anything else you can imagine, including your company. Tools are developing rapidly in this area and we have a long way to go, but these are exciting times. There is a conversation going on right now that you could contribute

to or learn from. What are you waiting for? Join in!

Community

82

: We have had online communities now for at least fifteen years or more. But the tools for building online communities are now becoming more widespread and communities are forming around every imaginable (an unimaginable) subject, product, and industry. If you are looking for your “tribe”, they are probably out there somewhere.

Cumulative Learning

83

: think of cumulative learning as peer reviewed journals for every person on the planet with internet access. People can now build on the knowledge of others (through the miracles of search and wikis) faster than at any time in history.

Architecture of Participation =

Build it so that it’s easy to participate

84

(need ref) means building things in a way that encourages people to contribute and participateQuestion(s): How do people participate when the software they use isn’t designed to let them do so? How do people collaborate on their spreadsheets easily? How do people co-create marketing materials quickly and simply? For the most part, they don’t because the tools are designed for stand-alone use.Old Thinking: Most software was designed for people to use alone. Even if they were connected at the same time as others, they would never know it. New Thinking: Your users should have the ability to see who else is “there”, to work with them in an ad-hoc manner, and to find their colleagues, no matter where they are physically located.Example(s): Wikis are a great example of this principle. They are designed from the ground up as places for people to collaborate.Lesson(s): Build for participation. Build “awareness” and “presence” into your systems. Make it easy for people to work together no matter what your tools do.Tags: Social Media, Wikis, Presence

New business models

85: Pricing: “Letʼs give them Freemium pricing with per-load usage and metered APIS.” (Read on for the translation.)Question(s): How would you package and price a web application? Old Thinking: Most people would assume that a software as a service would have to be paid by monthly fee. But it turns out that there a lot of different models. New Thinking: Oracle charges the same as if you bought the software for your own company and THEN they charge hosting fees on top. Salesforce.com charges an annual or bi-annual fee PLUS monthly subscription fees (depending upon your deployment size). Some smaller web 2.0 application companies charge per user. Others use “Freemium” pricing – itʼs free for a certain number of users or certain amount of load on the system, but if the users go past those thresholds, then tiered pricing kicks in on a monthly basis. Another inventive approach to pricing is to charge by LOAD and not by users. The idea is that it is better to have a company put all of their people on your application and not have a barrier to adoption be the per-user pricing. BUT the catch is that there is some sort of metering of the application load.

Here is yet another innovative approach. If your application has APIs (connections that allow other applications on the web to talk to it), you can allow connections for free up to a point...but if that remote application begins using too much time on your API, it can cross a threshold beyond which you start billing them. This is referred to as a “metered API”.Example(s): A great example is Basecamp from 37 Signals. You can invite as many people as you need to one project and it costs nothing. But as soon as you open a second project, you need to start paying.Lesson(s): Innovation can be found anywhere. It can happen in your sales, marketing, product development, delivery methods...and also in packaging and pricing.Tags: Mashup, API, Pricing, Freemium, Per-Load Pricing, Per-User Pricing

Serious network effects!!

86

What are the applications and features that support Web

2.0?

87

57 million blogs - some of them HAVE to be good

88What a shock, then, to witness the near-instantaneous rise of 50 million blogs, with a new one appearing every two seconds...These user-created channels make no sense economically. Where are the time, energy, and resources coming from? The audience.”- Kevin Kelly, “We are the Web”, Wired Magazine, Issue 13.08The creative destruction of politicsThe creative destruction of mediaThe impact on businessOverview:Who do they impact? Marketing and corporate PR departments will be impacted. Blogs in general: 0 (Mar 03) - 20M (Oct 05) = 18.9M blogs (doubling every 5 months. Consistent doubling over the past 36 months. (ref. DDavid L. Sifry, Technorati Oct 2005 State of hthe Blogosphere (>70,000 created DAILY).Tagging: ~1/3 of blog posts have tagsQuotes: "It'll be no more mandatory that they have blogs than that they have a phone and an e-mail account," [Sun CEO Jonathan} Schwartz says. "If they don't they're going to look foolish." B4B"There's no fundamental difference between giving a keynote speech in Shanghai in front of 30,000 people and doing a blog read byseveral million people," Schwartz says. B4B "There's no better ambassador for Sun Microsystems than an employee," Schwartz says. B4B NO FEAR IN THE ENTERPRISE: "There are a lot of people who have a lot of opinions about every corporation, and they're having conversations," [Lisa] Poulson said. "That's free market research. A corporation that is afraid of the participation that comes iwth conversation has larger problems." (AWESOME QUOTE) “Iʼve had my Best Year in 20 Years! Why? On July 27, 2004, I began to Blog. Iʼve had a ball. My “constituency” has had a ball. My life has changed...thanks to...blogging. IʼM HAVING THE CONVERSATION OF MY LIFE...WITH MY...COMMUNITY....WORLDWIDE. Robert Scoble, single-handedly at first, has given the EVIL EMPIRE (Microsoft, who els?) a “Human Face”...thanks to his blog...This forreword (Iʼve written over 50 “forewords”!) is...PERSONAL. ”Business Blogging” is incredibly important...or at least it can be if you follow some “simple rules”...openness & honesty & cool (not exactly businessʼs Big Three)...Biz Blogging...WORKS. It is of...MONUMENTAL IMPORTANCE. (Or can be.) Listen. Please. If you donʼt youʼre a damn fool.) – Tom Peters in the foreward to Naked Conversations“What does Microsoftʼs experience have to teach other businesses? According to [Joshua] Allen, [blogger at Microsoft], ʻYour whole company wonʼt collagse if you do this and your customers will love you.ʼ” NC. p13“[Blogging has] been a great way for us to communicate to our customers – and for our customers, more importantly, to communicate with us. We trust our people to represent our company. Thatʼs what they are paid to do. If they didnʼt want to be here, they wouldnʼt be here. So in a sense you donʼt run any more risk letting someone express themselves on a blog then you go letting them bgo out and see a customer on their own. It just touches more peopel. Hey, if people need to be trained, we can do that, but I find that blogging is just a great way to have customer communications.” – Steve Ballmer, NC, p19On quelling rants and flames: “[Mike Torres, lead program manager for MSN Spaces] used search services such as Technorati, Feedster, and PubSub to quickly find and respond to any comments for or against MSN Spaces. ʻIt stops the rants,ʼ he said. ʻA lot of times when you do that, thereʼs a ʻSorry – I didnʼt know you were listeningʼ reply. One guy posted, ʻBig retraction: I was wrong.ʼ What happens is that if they know youʼre in the conversation, people get respectful. They may still criticize you, but they donʼt lie.” – NC p20“Now, the Web is enabling the market to converse again, as people tell one another the truth about products and companies and their own desires.” The Cluetrain Manifesto (NC p31)“As author-speaker Ben McConnell, a partner in Church of the Customer and co-author of Creating Customer Evanglists: How Loyal Customers Become a Volunteer Sales Force, told us, ʻThere is simply nothing more powerul than customer evangelists. Blogging enables companies to convert customers into word-championing evangelists, a powerful mechanism for true believers to spread the word about what you do and why other people should believe in what you are doing.” NC P33Yossi Vardi “Blogging is “word of mouth on steroids.” NC statement.“You may be asking whether blogging is as useful or relevant when your organization is in a period of crisis. My answer to that is yes. Itʼs more important then ever to open the door wide, speak as honsestly as possible and listen to your customers....One final word of advice: if you feel blogging is right for you and your company, donʼt spend your precious hours seeking the approvals of an endless body of corporate stakeholders. Launch your blog and watch the conversation unfold.” Bob Lutz, Chairman, Global Products Development, GM (in the foreword to TCBB).. page xiii.Who SHOULDNʼT blog“People who have really awful communications skills should not blog. Employees who hate their jobs, their managers, or their products and services will find blogging a catalyst for early departure. Executive officers who cannot resist making overly rosy predictions may find their blog has a thorny backlash, and the same goes for marketing professionals who cannot resist strings of enthusiastic adjectives. People who find their jobs repetitive or dull shouldnʼt blog. In fact, people who are dull usuually have dull blogs and receive litte notice. People who canʼt abide criticism will not enjoy the blogging experience. he stronger the position they take, the stronger the comments disagreeing with them may be. Commenters may not agree with you, might not like your work, might have something against your company, or just might not like you personally.

Should we blog?McConell and Huba see “todayʼs blogging situation as running a parallel course with business Internet adotpoin in the middle 1990s. Adoption went sslow at first. Companies wondered aloud what they could possibly do with a web site, but then a tipping point was reached, and virtually every company found that it needed to have one. Huba and McConell se a time when business blogs will become just as pervasive. ʻI see no reason for any company not to blog – unless theyʼre sleazy. Every company needs a feedback system, ad the easiest way to do that is through a blog. Itʼs almost like a truth serum,” she said. NC p89/90.“Still, culture is clearly playing a role in how blogging develops. it can be national, ethnic, corporate, or departmental. Where people are encouraged to speak their mind, and those in power trust the people they oversee, blogging flourishes. There are reasons by political blogging in the United States has taken off wildly, whereas in China it has not. We imagine the same could be said about why blogging is not prolific at Apple Computer but it is at Sun Microsystms.” p131 NC.“If an organization isnʼt already in a place where openness and transparancy in comunication eists and is practiced, then using tools like blogs will be unlikely to do anything positive for that organization. If your opennesstransprency foundation isnʼt there, donʼt blog.” [said] Neville Hobson, the European-based PR consultant and ppopular podcaster. P145 NC“Culture changes slowly. If yours is closed, we suggest opening it before shocking the ecosystem with a blog. If your employees feel untrusted, you may need to take steps to demonstrate your faith in them before you encourage blogging. If your cultureʼs communications policy is rooted in command-and-control rules, blogging will falter. If you donʼt have genuine faith that you can evolve a better company by listening to what your customers, prospects, investors, vendors, and partners have to say, then a blogging effort will not provide you with its full value. If you donʼt want to listen – REALLY listen – tehn blogs will be thorny for you and your culter. If you canʼt be candid about your companyʼs dirty laundry, then blogging probably isnʼt for you. If you insidt your company doesnʼt have dirty laundry, then your company may be too boring to write about. Every compny has its share of problems. If you arenʼt willing to discuss them with some degree of openness, then youʼll be missing a huge amount of power that the blog could bring to your company. People are hungry for companies that have conversations with them – warts and all. They tend to distrust companies that try to say “everythingʼs perfect here.” We like the somewhat poetic observation of Cold River author Jozef, Imrich, who told us, “Sunlight is the best disinfectant – all great CEOs encourage transparency and opeenness as long as sensitive data is not leaked.” P146 NC

wiki = quick

89

RSS is the lifeblood of the web

90 is the lifeblood of Web 2.0. It connects machines to machines, people to machines, and people to people. Think of it as the means by which all information will be passed from anything to anything. Question(s): What is your RSS strategy? Uhh, yeah, we thought so.Old Thinking: HTTP requests from browsers to web servers were the “new new thing” in web 1.0. New Thinking: RSS is now being used for data synchronization across the globe. It is the root of what makes mash-ups work. It is becoming the dominant messaging protocol between entities. It connects people to machines, and applications to each other. Example(s): RSS underpins the entire blog infrastructure and is the foundation of mash-up culture. Microsoft has publicly stated that RSS will be built into everything Microsoft does from now on.Lesson(s): Embed RSS into everything you do. It is the universal lowest common denominator messaging protocol for the web. Tags: RSS, messaging, Services Oriented Architecture, Web Oriented Architecture

Run RSS feed managers internally; collect business intelligence data from the outside and bring it into your system

web services

91: o Amazon: runs 1 million partners through their SOA serviceso IDC: “Worldwide Web Services Software 2005-2009 Forecast: Let the Races Begin:, May 2005, Doc #33418, 26 pages, Sandra Rogers♣ 2003 = ~$1B+; 2004=$2.3B spent on total Web Services software (>100% growth); expect growth to increase dramatically reaching $14.9B in 2009 (= CAGR of approx 45%!!!!) • Overview:o Service: a thing that fulfills a purpose. It has a name, a job, job tasks, contact information and policies regarding security and service levels.o Services collaborate through:• orchestration• business interaction• interceptiono Types of services:• request/reply• worker• monitor• agent• intermediary• aggregator• proesso SOA includes three definitions: architectural, style of business solution, and supporting infrastructure.• Benefits:o Business:• consistent experience for customers and partners across lines of business (?)• business agility• time to delivery for applications should be faster o Technical:• mix and match (reuse)• optimize interactions vs traditional applications (how?)• reduce costs (by reuse)• • leverage existing IT investments (particularly legacy)• aid in transitioning your systems• Lessons:o Make sure SOA is the appropriate strategy choice for your business!o Start with a specific business problem!o create a strong services catalogo there are several styles of SOA. Know which one you are doing and make choices accordingly!o REST vs. SOAP?: Who cares? Do what the customer wants!!!!o Relative Value = (effort over time x (value of agility + value of reuse))o Look at what is currently being used on an 80/20 basis. That is a good starting point for what is actually reuseable (but not directly).o Costs can be 30 to 100 percent of the design stage (which is 10% of the application cost). Therefore this means adding 3% to 10% to an applicationʼs costs overall (ref. Forresterʼs heffnerʼs estimates in “The Truth About SOA”o Priorties: address your direct revenue opportunities for your customers and work only on critical pain points; then look at new. [I would edit to say “revenue gen for our customers, revenue gen for us, cost savings for us in that order.TA]o Adoption curve: (ref. Giga Information Systems via “Web Services Helping to Transform Government” PPT• Early majority 2006-2008• Late majority: 2007-2010• Laggards: 2009 forward o set the hype aside and evalluate whether XML or SOA is useful or appropriate to the task at hando find high value examples first and do themo • Questions:o who ran our original Web Services group that launched the services in 2002?o • Risks:o XML standards and SOA standards are evolving rapidly and are not yet matureo management and deployment tools for services are just emerging (Grand Central, Flamenco, StrikeIrono skills shortage is a risko standards gaps are problematico • Companies:o Workday from PeopleSoft Founder David Duffield (new company launching soon to do HR, financials, and supply chain software)

Forget 800 OEMs.How about 10,000?

92: Mash-ups: Innovation is shifting to the edge and exploding exponentially, making hackers, remixers, and power users the new innovators. Question(s): Do you fear hackers and remixers? Or do you support them?Old Thinking: Innovation had to happen by the developers adding new features.New Thinking: Innovation is happening at the edge where hundreds of thousands of power users are remixing data in unique ways from various sources into their own custom applications.Example(s): Housingmaps.com, Mappr (Flickr + Google Maps), DoubleTrust (search Google and Yahoo at the same time) Lesson(s): Build your applications to be hacked and remixed. Build and give away access to your APIs. Adopt the “Law of Unintended Consequences” as your guiding light – know that if you do your job correctly and give access to your tools away to the world, that people will do all sorts of amazing, inventive, and wonderfully creative things with your software that you would never dream of. Tags: Center to Edge, Innovation, Hackers, Mash-ups, Remixers, Power Users

• mashup = mix and match • rss makes this possible • RSS definition: "users can read what they want, when they want, without surfing thousands of sites." • companies: Bloglines, Eurekster, Simply Hired, Technorati, Trulia, Wink, Google • Drivers: SPCM • software reuse • AJAX • API exposure • interest in lightweight application development • interest in building small applications that do simple tasks • users looking for small apps to help them with little tasks • Predictions: from SPCM • exponential growth • mass growth will require order to chaos which will lead to API registries of some kind • mashup tools will arrive but they will suck (we can get the data but we can't MANIPULATE the data) - [BOBJ opp: we can do this with WebI already. We need to host Webi and have it tie into all mashups so that people can do cool things with it!!] • cross-domain/app security will be a problem. [Dick/SAML - where are you?] • mashup adoption will follow the regular curve. • ecosystem crises will develop because of explosion of services, APIs, dependencies, vicious cycles, scalability, privacy, identity, etc. HUGE issue. [BOBJ Opp: how can we help bring order to chaos?] • RSS beats ATOM because it's easier to use • Lightweight scripting languages will win (because they're light, fast, malleable) • Intellectual property wars will continue to run rampant

• Eric/SAP: We have moved from a siloed application company to an enterprise platform company with a huge ecosystem because that will be what drives our success. Mashups are the future of our business.o The enterprise 1.0 companies that will do best will be the ones that open up the fastest and who start to work this way.

“Where are you?”“Oh I see you”

93

“Hello? Anybody there?”

94Presence awareness: know where your friends are and if theyʼre available to communicate with you.Questions: Are your users aware of each other? Can they interact over time and in real-time? Are they aware of each other? If so, how can you connect them more? If they are not aware of each other, what can you do to connect them?Old Thinking: Work on your own. Visit the Website on your own (even though there are many other users "there". Use your web application on your own (even though 1,000 of your colleagues are logged in at the same time.) Work in a vaccuum...or if you have the tools to do so, use a proprietary (and expensive) knowledge management system to build upon the knowledge of your peers...as long as itʼs within the (fire)walls of your organization.New Thinking: When you visit a site, you know that other people are there with you. When you run your web application, you can tell who else is logged in and you can collaborate with them in real or delayed time. Lesson: Connect your users to each other. Let them sense when their friends, peers, and colleagues are “there”.Tags: Individual to Group; Social; Technical

"It's better to keep your money in the bank than under

your mattress"

Same with software.

95Overview: IDC: FRAMINGHAM, Mass., May 4, 2005 - Worldwide spending on software as a service (SaaS) reached $4.2 billion in 2004, an increase of 39% over 2003 according to a recent IDC study. IDC believes worldwide spending on SaaS will continue to increase over the next five years at a 21% compound annual growth rate (CAGR), reaching $10.7 billion in 2009. "There is no doubt that software as a service has become a driving force within the software industry," said Erin Traudt, research analyst, Software as a Service research at IDC. "Indications are that customer adoption will continue over the next five years and spending will remain on the rise." IDC believes software as a service adoption will be driven by customer need to improve business processes, an increased understanding of and interest in the software as a service delivery model, growth in the number of software as a service offerings, and the creation of enablement programs to help independent software vendors (ISVs) take advantage of the software as a service opportunity. Buyers from small and medium-sized businesses and divisions of larger companies are leading the charge as the most frequent customers of software as a service. "The software industry must adopt a new frame of reference for value creation," added Traudt. "Software as a service delivery is at the forefront of this trend, and adoption will grow as more customers experience software as a service and the offerings mature, becoming more readily accepted and available in the market." The IDC study, Worldwide and U.S. Software as a Service 2005-2009 Forecast and Analysis: Adoption for the Alternative Delivery Model Continues (IDC #33120), analyzes the key supplier trends and events impacting software as a service. The study also includes future outlooks on industry developments, such as anticipated impacts of customer behavior, supplier actions, and the competitive environment. Phil Wainewright:April 11, 2006The old software model dies here*****I think the majority of mainstream vendors — and their customers — have failed to recognize the pace and extent of change because they underestimate the weight of their own inertia. They acknowledge the need for change, but they're also conscious of the disruption and pain required to embrace it. So they act slowly and tentatively, hoping that if they wait long enough something will happen to make the change easier. What actually happens is that waiting makes the change even more painful, and they'll end up forced into it anyway by the competitive pressure from others who had the foresight or the opportunity to act when they chose not to. (PARA) All this inertia means that vendors will continue to be reassured by their customers that they can continue to delay moving faster. In reality, what will happen is that both they and their customers will be overtaken before they even notice it's happening.Ray Lane,“More than a change in pricing or business model, software as a service is an inevitable, fundamental shift in enterprise software culture.”“There are two paths to long-term survival for todayʼs enterprise software companies. The problem is that very few companies are heading in the right direction.”“There is a new kind of software Darwinism going on. The harsh reality is that over the next 5 to 10 years, most of todayʼs software providers will not fare very well. The only way for enterprise software suppliers to survive this wave of industry evolution is to innovate and/or dominate. And 2006 is the year to get started.”From the Innovate Dominate Imperative:“This year, many software companies will be busy trying to convert their offerings from products into services. In fact, I would estimate that last year, software-as-a-service (SaaS) was the number one item on the agenda of 70 percent of software executives.

I'm here to tell you that this is a mistake.

Don't get me wrong, I'm a huge proponent of SaaS, on-demand, Web Services or whatever you choose to call this model. (In fact I wrote an opinion piece about its importance last year for SandHill.com. ) But a service offering is not going to mask a vendor's inability to create innovative products and gain market share.

That's not to mention the tremendous, all-consuming two-year process of changing almost every part of the business - from product architecture and pricing, to marketing and support - to a service offering (see chart). I'm not sure most companies have the DNA or the leadership to pull off such a massive transition.

Eric Schmidt at Web 2.0, 2006: + SAAS IS GOOD FOR USERS AND DEVELOPERS: If your software is in a data center, it MUST work 24x7. That drives more reliability by all coders building those apps. In the old days, they would ship software, users would install it, and it would break down in data centers all over the place but not at the same time. When it's all in a data center, it means that when it breaks, you have 10,000 angry customers yelling at you to fix it NOW. This drives an entirely different level of rigor in your software design and coding. It also means that the users are now focused on doing their work - not on fixing theirsoftware. So moving to SaaS is good for your developers and good for your users. + TIPPING POINT OF SAAS: It's "fundamentally better to keep your money in a bank than in your pocket. It's (now) fundamentally better to run apps centrally than on the desktop. This is the beginning of a very important period."

Case Studies:Mastercard: In 2004, MasterCard International decided to replace its employeeperformance evaluation and goal-setting applications in favor of a SaaSalternative. The financial services company found its internally-developedapplications no longer satisfied their needs since they were not integratedwith one another, leaving employee review and goal-setting processesuncoordinated. The applications also could not be easily accessed remotely,making it hard for employees to complete reviews outside their offices. Therealso was no automated way to notify users of updated information, making ittough for managers to monitor employee efforts to achieve their goals.MasterCardʼs human resources department believed a SaaS solution couldovercome these challenges, and selected SuccessFactorsʼ workforceperformance management solution to meet its needs.In just two weeks, MasterCard implemented SuccessFactorsʼ applicationsuite to support its approximately 5,000 employees.“We are very pleased with the rapid rollout and ongoing reliability of theSuccessFactors WPM application service,” reports Ed Stutz,MasterCardʼs Director of Human Resource Solutions & Systems.A major reason MasterCard experienced a fast time-to-market withSuccessFactors is because it could be implemented incrementally andfunded as a business expense rather than a capital expenditure. IOMEGA: According to Mike Nikzad, Vice President of Customer Relations at Iomega Corporation, “RightNowʼs hosted software cut Iomegaʼs customer support systems operating costs in half. The company achieved these cost-savings by eliminating software and server maintenance fees, private data line charges and other related infrastructure expenses.” British Telecom: In addition to these case studies, another industry sector experiencing success with SaaS is eCommerce. This is a business that depends on an integrated suite of secure applications to ensure that transactions are processed quickly and potential threats are mitigated to prevent costly downtime and valuable data from being compromised. Venda offers selfservice eMerchandising, eMarketing and sales applications to support todayʼs increasingly complex eCommerce environments. Vendaʼs SaaS solution helped British Telecom's (BT) Retail online store reduce IT and content management costs immediately, and achieved a 244% ROI within five months according to a Nucleus Research report. Xerox used Venda to provide its product resellers with a fully integrated B2B commerce service increasing their overall profits and reducing inefficiencies achieving a 232% ROI in 13 months. “Venda manages an unbelievably cost effective platform providing consistently branded but

We are "teaching the machine how to name things"

96: Tagging is a way for humans to map their confusing, conflicting, and messy view of the world onto our data. It is better than search. And it gives us flexibility we didnʼt have before when categorizing things.Question(s): Can your users tag content? Why not? Are you still forcing people to falsely “store” files or data in one folder or category or another? Why?Tags: Tagging, metadata, file structures, foldersOld Thinking: In a closed environment, we can come up with a strict dictionary of terms that people should use to categorize things. New Thinking: Let people come up with their own words for things. And use that messy model to find things. Example(s): Kevin Kelly wrote: “When we post and then tag pictures on the community photo album Flickr, we are teaching the Machine to give names to images.” Try Googling “Sports nutrition”. You get 66, 100, 000 results. But if you go to del.icio.us del.icio.us <http://del.icio.us/> and search for “sports + nutrition” you get 243 highly focues sites that have been tagged by people. More results are not better! Lesson(s): Build tagging systems into your tools. Ideally use the emerging tagging standards and make them interoperable where possible. Watch how your users tag things to see what you can learn from them.

• “when we post and then tag pictures on the community photo album Flickr, we are teaching the Machine to give names to images.” The thickening links between caption and picture form a neural net that can learn. Think of the 100 billion times PER DAY humans click on a Web page as a way of teaching the machine what we think is important”

Online communities are exploding

97Online communities

• Definitionso “the internet exists to improve communication. Communities can grow anywhere communication occurs.” – unknowno news groups, chats, meeting & conferencing tools, Instant messaging, document sharing, threaded messages/forums and/or blogs where like-minded people congregate to share ideas, solve problems, collaborate, or work on projects.o community – a group of people with shared goals or interestso online community – a group of people with shared goals or interests that “would find it difficult if not impossible to exist otherwise.” – John Heap, Brian Kelly in BOCBB• Overview:o Communities must have a purposeo Communities have a life-cycle like cities, ant hills, and most of biology and go from build to active participation to slow, terminal decline. Development, Introduction, Growth, Maturity, Declineo “You must know why your site exists. Otherwise, you cannot judge the effectiveness of any policy. Worse yet, how will visitors know if they want to join the community? What benefit does the user derive from participating? Why should anyone care? Without an underlying goal, itʼs extremely difficult to guide users in constructive ways.” – chromatic, Building Online Communitieso “Be positive. Be assertive. Be as simple as possible. Leave vagueness and doubletalk for corporate mission statements. Use a slogan if you must.” – chromatic• Benefits:o insight into customersʼ preferences, habits, and attitudes PWNPo increased customer loyalty PWNPo increased sales PWNPo fewer support phone calls PWNPo ideas for new products and services PWNP• Risks:o “The investment in community has become increasingly hard to justify because sites have not been able to articulate, let alone measure, the value it adds.” – Meredith Levinson, People Who Need Peopleo Just because appropriate tools exist does not mean that thriving communities will emerge and prosper.” BOCBBo “Many companies have attempted to implement self-help and customer-to-customer interactivity on their web sites. With a few exception, these companiesʼ efforts have largely been unsuccessful or are used by a small minority of customers – not because these strategies donʼt work, but because these companies have failed to understand their customers.” LWOCSC Liveworld)• Strategic Issues: (from BOCBB)o What are the motives, pains, visions, goals of the stakeholders in this community? (internal and external)o Functionality: what functionality does it need?o Integration: How (or will?) we integrate it into our other systems?o Usability: how will we ensure maximum usabilityo Security and performance: how do we maximize those?o reusability: can we reuse / syndicate / flow this data where we need?o support: how will we ensure that this community has the support it needs in terms of real live people?• Processo Startup barriers:

distributed identity is not there yet

98OpenID, SAML, Sxip - store my identity in chunks all over the internet; have it be persistent over time

immersive environments are at the beginning of the "knee

of the curve"

99$300M/yr next year; $500M ancillary economic market surrounding it. o HOLY COW!!! o The four pillars of gaming: strategy, achievement, narrative, community. o Each person has a different balance of what they're interested in. o Here is the paper that John Seely Brown and Douglas wrote about multi-player games. o [This "movement" is stunning. This game takes 100 hours just to do some basic stuff. Then hundreds of hours to get to an "endgame" (like a quest) where people can work together to achieve a goal (like finding and slaying a dragon together.) o [This is tying together some very deep-rooted human drives - sharing, learning, teaching, self-development, coaching/mentoring, creating, building community, creative instinct, building economies, establishing reputations, building identity, and many more.] o The distinction between real and immersive is over o Here is a clip of South park playing World of Warcraft that is pretty funny (if you don't like South Park and don't know anything about World of Warcraft, the humour will be lost on you.)

------Second Life "stuff":

IRS taxation of online game virtual assets inevitableBy Daniel Terdiman, CNET News.comPublished on ZDNet News: December 3, 2006, 9:45 AM PTicn_balloon_154x48

* ZDNet Tags: Games,

NEW YORK--If you are a hard-core player of virtual worlds like World of Warcraft, Second Life, EverQuest or There, IRS form 1099 may someday soon take on a new meaning for you.

That's because game publishers may well in the not too distant future have to send the forms--which individuals receive when earning nonemployee income from companies or institutions--to virtual world players engaging in transactions for valuable items like Ultima Online castles, EverQuest weapons or Second Life currency, even when those players don't convert the assets into cash.

Most governments are only beginning to become aware of the substantial economic activity in online games, but the games' rapid growth and the substantial value of the many virtual assets changing hands in them is almost certain to bring them into the popular consciousness.

"Given growth rates of 10 to 15 percent a month, the question is when, not if, Congress and IRS start paying attention to these issues," said Dan Miller, a senior economist with the Congress' Joint Economic Committee, who is also a fan of virtual worlds. "So it is incumbent on us to set the terms and the debate so we have a shaped tax policy toward virtual worlds and virtual economies in a favorable way."

Miller's comments came during a Saturday panel called "Tax and Finance" at the State of Play/Terra Nova symposium, the fourth annual gathering at New York Law School of academics, lawyers and other scholars to talk about the legal, social and economic issues surrounding virtual worlds.

The panel was formed in the context of recent questions, which were first raised by author Julian Dibbel in his book, Play Money and in an earlier article he wrote in Legal Affairs magazine, about whether the changing of hands of virtual assets or players picking up virtual loot by, for example, killing monsters, creates taxable events.

"If you haven't misspent hours battling an Arctic Ogre Lord near an Ice Dungeon or been equally profligate spending time reading the published works of the Internal Revenue Service," Dibbell's article began, "you probably haven't wondered whether the United States government will someday tax your virtual winnings from games played over the Internet. The real question is: Why hasn't it happened already?"

And while Miller's committee began examining these issues in October, his comments Saturday suggested wider future congressional oversight and setting of IRS tax policy than had previously been indicated. That's in spite of the fact that Miller said his committee, and Congress in general, is not out to gouge virtual world players.

"The Joint Economic Committee is not seeking to impose a new tax on virtual economies," Miller said. "We have a very clear record of supporting lower taxes in free market."

Meanwhile, Miller's fellow panelists also weighed in Saturday on Dibbel's question, and came at it from several different perspectives.

First up was William LaPiana, a wills, trusts and estates professor at New York Law School. He approached the question by examining whether estate taxes would accrue on the transfer to an heir of a sizable collection of valuable virtual assets if a player of a virtual world died.

LaPiana said that there is little question that the transfer of such assets could be taxable, since it is property. However, he did say that the taxes would accrue only if the assets were worth in excess of the limit set by the state in which the deceased died. In most cases, he said, that amount is $2 million, though some states, like New York and New Jersey, have lower limits.

Thus, there are not that many instances in which someone has that level of assets, though the recent news that Second Life land mogul Anshe Chung had amassed $1 million in virtual land and other holdings certainly puts her heirs at risk if she dies.

BEST PRACTICES

100• Pay your users first• network effects on by default• involve users• Trust your users• design software so that it gets better as more people use it• allow for unintended consequences• seek to own a unique, hard to recreate source of data - and then build on it• reserve only some rights, not all• own the index, the namespace, or format (Google / Westlaw / others)• make your data addressable and reusable• give your customers the ability to leave - they won't• offer APIs to your services• design for remixability/hacking/reuse• Apply API best practices• be your own platform customer• watch your customers remix the data; follow them• Rethink SOA into WOA• usability and simplicity and speed are paramount• search is more important than structure• Look for measurable ROI: • Transition off the desktop strategically only when it makes sense• design from the beginning to share everything• think about location awareness• write "across" devices• leverage the center to make the edge look smart• optimize for one-click peer production• enable data location independence (it's everywhere)• release early and often!!!!• instrument your product• create new products incrementally and frequently• make operational excellence a core competency (or find somebody to do it for you)• use lightweight dynamic tools / languages• Enterprise: start with pilot projects• Leverage the long tail, no shelf-space, customer self-service• outsouce whenever practical and possible;• "Fail fast, scale fast"• Design for scale (i.e. simplicity, self-service, and hackable systems scale)• "Enterprise class" no longer means anything. MySpace or equivalents add more people in day than the entire combined workforce of HP, Microsoft, Dell, IBM, and Sun combined

small teamslight, fast applicationsmake it useful for the individual first, small teams second, large teams laterlow barriers to learn, deploy, purchasepoint solutionsquick time to valueserves an individual need

is virally adopted

contextually personalized information – knows the location of the users, the reason they are there and what information they might need because of that.

no data entry or training required – instant “I get it”

dilvers instantaneous value

utilizes community and social relationships

minimal IT footprint.Individual value–take the mindset of individual in the enterpriseLow resistance

Clear value to user

Immediate value

VSB Market: 72 million x $5000 = $350B/yr??

101Very Small Business: ♣ Ref “SaaS for Very Small Businesses – Show Me the Money” by Zoli Erdos; 72 million small businesses spend $5K or less each year (ref. Ziff Davis)♣ www.smallbusinessvision.com <http://www.smallbusinessvision.com/>—vendorparticipants.php♣ AMI-Partners' report, "2005-2006 U.S. SMB Applications & Solutions Market Overview and Assessment", provides an overview of business applications and solution use among small and medium businesses in the U.S. The focus is on adoption and spending on ERP, CRM, accounting software, outsourcing, hosted and software as services solutions by employee size and vertical industries.

SMB is ~24 M companies >100employees; 50 % of European workforce (IDC); 50% of small businesses aren't even online!; only change when in extreme pain;

SHOW ME THE MONEY!

102

Increase revenues

103acquire new customers through....cross-sell and upsell.Be warned – this may be a mistake if your business has digital product or could have digital/real product hybrids. If so, it may be subject to Long Tail economics which dictate that sometimes millions of markets of a few may be more profitable than a few markets of millions. (Long Tail theory is beyond the scope of this article - your best bet is to go buy Chris Andersonʼs book The Long Tail and do an analysis of your business against the Long Tail principles.) Instead, focus on your most profitable products and services...and donʼt assume that they are your “hits” and “best-sellers”. If your venture is Long Tail friendly, you may be making more profit off of the products you sell in smaller batches, and there may be an opportunity for you to drive further down the tail to sell fewer products to fewer people and to make more money at the end of the day. More effective sales channels and advertising channelsNext, you will want to explore more effective sales channels and advertising channels. This is straightforward. If your product can be sold in a self-serve fashion over the internet and isnʼt currently being sold that way, start doing it. If your product is too complicated to sell in that fashion, then consider building a simpler version if there is a market for it and selling it in a self-serve fashion over the internet. As for advertising channels, expand your use of internet search as a channel. In one study that he referenced, Dr. Paul Kedrosky, Venture Partner at Ventures West, found that the cost of new customer acquisition using direct sales was $22,000, indirect was $5,000, direct mail was $70, email was $60, online banner ads were $50, yellow page ads were $20, and search was $8.50. Whether the specific numbers fit all companies and categories is irrelevant. The most important fact is that direct sales were roughly 2500x more expensive. Some kind of order of magnitude multiple is probably present in your business too. Hire somebody or pay somebody to execute an effective internet search engine optimization campaign to maximize lead generation. Start blogging NOW!!!!!If your organization doesnʼt already have corporate blogs, it needs to start. This is no longer optional when search becomes a primary way that your prospective customers learn about you. Blog postings have inordinately high Google rank and always sit at or near the top of the Google listings. If you donʼt want to suffer the fate of Kryptonite or U-Haul, both of which find themselves with pages and pages of negative customer rants on their first Google pages, then start blogging as soon as possible and have people say nice things about your company. There are many corporate blogging books and web-articles written on this subject. Two of the better books on the subject are Naked Conversations by Robert Scoble and Shel Israel (a good high-level overview of why companies should blog) and Blog Marketing by Jeremy Wright (a detailed look at how to “do” corporate blogging well.) Avoid Blog! by David Kline and Dan Burstein – the material is not as good as the Scoble/Israel book and is written in the form of interviews so the lessons are scattered through out the book. product & service innovationAmong many other options, a company can: broaden its offerings (by rapidly modifying existing offerings to better suit customers or adding new ones) to appeal to more segments; move from a platform model to an eco-system model; increase the quantity and quality of offerings launches; improve time to market, improve the product design process, or improving the innovation skills of your people By employing Long tail theory, there is the option to create more offerings that would appeal to the “Tail”. Or by moving a software company from desktop-based software development to a Web 2.0 “light, small, fast, and cheap” development methodology, there will be more opportunity to get feedback from your customers, learn from it, and adapt the product, leading to more rapid product innovation. Another approach worth exploring is moving from the traditional platform model to an even more richly connected eco-system model, by creating smaller web services that can be linked to many, many more companies, which in turn makes your systems more valuable to a customer. Finally, blogs, wikis, RSS readers, blog editing tools, and RSS aggregators could be deployed as a light-weight knowledge management system with which to share innovation best practices, learning, and content. By opening this system up to a broad set of employees, partners, customers, and even competitors, innovation ideas can come from anywhere in the eco-system, not just from the core design team or business leaders. As an example of this, IBM recently launched an Innovation World Jam where they are asking their entire eco-system to help them innovate in public. Another significant opportunity lies in creating web services that access your systems, processes, and information. No matter what kind of business it is, there is probably some sort of opportunity to expand the number and type of customers that it serves by offering access to its data, services, and systems such that it makes it easy for a customer to interoperate without having to go down the outmoded and expensive EDI path. Lightweight web services are quickly replacing expensive traditional EDI links. There is a great article by one of the Amazon.com architects on how they re-architected their entire operation around Web Services and how that allowed them to build an ecommerce platform with over a million active retail partners. The article can be found here. Look at your operations. Think about how you could open them up to the world and make it easier for people and companies to do business with you. How could you make it easy for a thousand or a million customers to connect to you? Not by having your people involved, obviously. But by building web services that make it easy for others to do business. Product development is faster: Product Development: What if you could build products that your customers wanted AND you could revise them 1,000 times faster? Question(s): How long does it take for YOUR organization to release new versions of its products? What would it take to cut it from 6-12 months down to weekly revisions? Or daily? Or hourly?Old Thinking: You think up a product. You build it. You ship it a year later. It sucks. Your customers tell you it sucks. Six months later you ship a product that sucks less. New Thinking: Your product development team INCLUDES your customers from start to finish. And your product development loops have gone from 12 months to 15 minutes.Example(s): Flickr was an online game company that morphed into a photo sharing company by treating customers as members of the product development team, listening to them, then pushing out changes in 15 minute cycles (at their most frequent point).Lesson(s): Trust your customers. Listen. Test. Learn. Adapt. Put features in and then watch. Keep what works. Get rid of what doesnʼt. Keep it simple. Keep it lean. Tags: Product development, Flickr Time, Customers as Partnerscustomer retention & revenue expansionNext, letʼs look at customer retention and revenue expansion. There are four levers that can be modified to drive higher retention and volume of business: product & service innovation; account management, cross-sell/up-sell, and general retention practices. Since we covered product and service innovation in the previous section, we will discuss the latter three below. Traditional account management best practice would suggest that one should focus on the high-value clients. Just as in the case above, this is a mistake because of the Long Tail. There may be more value found by paying attention to the low-value customers in aggregate. Related to this would be the standard approach of rationalizing your customer base, weeding out the low-value customers and keeping the high-value ones. If you have a potential Long-Tail business, this is a mistake. Do the opposite of what conventional wisdom would suggest and see if you can derive more value from the customers that are buying smaller volumes but that aggregate to be a significant portion of your business. This requires that you drive your costs down as far as possible so that you can make money farther down the tail. This means having a search keyword strategy, using blogs as cheap marketing channels, and moving to a self-service model so that customers can find, learn about, and buy your service without interacting with your staff. Do you respect your customers? Most companies donʼt respect their customers, no matter what they might say. The evidence is legion. Customers are sick and tired of long delays on customer support even though “your call is important to us”, companies are deaf, dumb, and blind to consumer complaints on the web and in the blogosphere, customer satisfaction has become a mind-numbing exercise of ranking a customerʼs entire experience with the company on a meaningless scale of 0 to 10, and nobody seems to be paying attention to the many varied touch-points with the customer. There is another way. This leads us to cross-sell and up-sell improvement. Now it will become apparent that when we apply Web 2.0 tools and thinking in one area, it often has positive spill-over effects in other areas. For example, typical cross-sell thinking would have us once again revisit the high potential customers and the high potential products, both of which are covered above. We should also look at our sales and advertising channels to identify opportunities to cross-sell/up-sell to existing customers and when we do that, we now know to be aware of the entire tail and to use low-cost models where appropriate to

Improve your margins

104Decrease your Selling, General, & Administrative (SG&A) expenses:increase your use of search as a primary customer acquisition method – it costs a LOT less than traditional marketing channels. In fact, it can cost 1/2500th the cost of direct sales! bypass your existing channels and selling directly to your customers (a real possibility with hosted applications); use self-service principles to bypass your expensive direct and indirect sales channels and billing channels.redesign your complicated software products as hosted applications so that you can learn, test, adapt, and mutate them quickly; Decrease your Cost of Good Sold (COGS):radically rebuild your product development process from a monolithic, complicated, expensive process to a light, fast, agile process (or build a small, light fast process BESIDE your existing heavy-weight process);use hosted applications as a way to watch your users so that you can adapt your product faster and create product they want instead of product your engineers want to build.

Platt's comments on rss, blogs, wikis, IM, mobile, mashups: Implications and opportunitiesInternal: reduce cost and increase agility (hard to quantify the value)Web 2.0 usage internally: RSS; blogs; wikis; livemeeting; IM; mobile; BI/mashupswikis are REALLY REALLY USEFUL for doing product developmentsharepoint 2007 will have blog, wiki, and rss support built into itthey are key to the platformValue: increased productivity; improved teamwork; empowermentexternal: create business value and innovation (easier to quantify)partner and supplier engagementshared blogs and wikisrelationship and trustcustomer/partener engagement in:innovationmarketingFortune 100 company has a “director of disruptive marketing”salesWorking with John L. Scott to create a 3-way mashup of MLS data, JLS photos, and MS Virtual Earth map data plus ground-level and air-view photos all mashed up.trainingsupportCompanyCommand.comnew business models/revenue streamsadvertising

Become more asset efficient

105use SaaS applications everywhere that it is feasible (if they cost you less over time)• Mastercard: In 2004, MasterCard International decided to replace its employeeperformance evaluation and goal-setting applications in favor of a SaaSalternative. The financial services company found its internally-developedapplications no longer satisfied their needs since they were not integratedwith one another, leaving employee review and goal-setting processesuncoordinated. The applications also could not be easily accessed remotely,making it hard for employees to complete reviews outside their offices. Therealso was no automated way to notify users of updated information, making ittough for managers to monitor employee efforts to achieve their goals.MasterCardʼs human resources department believed a SaaS solution couldovercome these challenges, and selected SuccessFactorsʼ workforceperformance management solution to meet its needs.In just two weeks, MasterCard implemented SuccessFactorsʼ applicationsuite to support its approximately 5,000 employees.“We are very pleased with the rapid rollout and ongoing reliability of theSuccessFactors WPM application service,” reports Ed Stutz,MasterCardʼs Director of Human Resource Solutions & Systems.A major reason MasterCard experienced a fast time-to-market withSuccessFactors is because it could be implemented incrementally andfunded as a business expense rather than a capital expenditure. • IOMEGA: According to Mike Nikzad, Vice President of Customer Relations at Iomega Corporation, “RightNowʼs hosted software cut Iomegaʼs customer support systems operating costs in half. The company achieved these cost-savings by eliminating software and server maintenance fees, private data line charges and other related infrastructure expenses.” • British Telecom: In addition to these case studies, another industry sector experiencing success with SaaS is eCommerce. This is a business that depends on an integrated suite of secure applications to ensure that transactions are processed quickly and potential threats are mitigated to prevent costly downtime and valuable data from being compromised. Venda offers selfservice eMerchandising, eMarketing and sales applications to support todayʼs increasingly complex eCommerce environments. Vendaʼs SaaS solution helped British Telecom's (BT) Retail online store reduce IT and content management costs immediately, and achieved a 244% ROI within five months according to a Nucleus Research report. Xerox used Venda to provide its product resellers with a fully integrated B2B commerce service increasing their overall profits and reducing inefficiencies achieving a 232% ROI in 13 months. “Venda manages an unbelievably cost effective platform providing consistently branded but personalized eCommerce sites to our resellers in multiple languages and currencies. With integration into our SAP back-end trading system and marketing database, we are providing resellers and consumers with low maintenance, easy-to-use sites. It works so well we just keep adding more sites and are expanding the solution into four more countries this summer," said Steve Emecz, e- Business manager, Xerox Document Supplies Europe

Improve your reputation

106A portion of companyʼs valuation is based on its hard performance numbers but another major portion of a companyʼs valuation is based on market expectation. What do people THINK this company will be worth in the future? We believe that you can impact market expectations positively by using Web 2.0 thinking to improve your ability to execute:• build a lightweight knowledge management and content management system that lets your employees and partners share information better, faster, and cheaper using blogs and wikis. • Build an internal idea-pipeline using blogs so that you can capture ideas from your employees that might turn into new market opportunities or offerings. • Develop good will in your eco-system: get engaged by blogging; support open source initiatives that help your community and that coincidentally accelerate your product development (see points on improving operating margins above); • Establish some innovation processes – a way for your people to come up with ideas, filter and discuss those ideas, and then narrow them down to ideas that are worth pursuing. This will help your organization come up with additional ideas for where to apply Web 2.0 thinking!

Rethink PR move from one-way to two-way help bloggers succeed and they'll help us succeed

Build online community find the 100 most influential people in your community; bring them into the tent; get their help in building our community

Build sensing infrastructure RSS feed management/routing/groups/etc.

Find our "Higher calling" support those community initiatives that are related to us and DON'T PITCH OUR DAMNED PRODUCTS THERE

Warning!Construction Ahead!

107

Warning! Construction Ahead!Chaotic changes in a market always bring the potential for great risk and great opportunity. We have talked about the opportunities. Now, let’s turn our attention to the risks.• The single largest risk is the risk of inaction. While you are navel-gazing, some small, fast competitor might disrupt your industry and make you irrelevant. That may sound overly dramatic, but it’s true.

50 competitors per idea

108Low capital requirements means...well, anybody can build that web 2.0 app! If you build a low-cost, light weight application because itʼs cheap to do, you will have 30 other competitors because they too can build it for $50,000.

Stuff doesn't work yet

109The road is under construction and there is a lot of stuff that just plain doesnʼt work properly yet. The authors used collaboration tools to write this document and we probably spent a quarter of our time fighting with buggy technology – which was still better than using non-collaborative tools such as Microsoft Word.

Buzzwords get you budget, not results

110Collaboration, community, conversations, and collective intelligence are great buzzwords. But theyʼre damned hard to really build. Buzzwords get your budget approved but you need good smart people and a lot of hard work to get you the rest of the way.

Don't sprinkle 2.0 fairy dust on your old business or you'll

get killed

111Sprinkling Web 2.0 fairy dust on your marketing doesnʼt mean you actually “get it.”. Donʼt try to liberally sprinkle web 2.0 words in your Web 1.0 product and service marketing materials or youʼll be hammered by the market for “not getting it.”

Pick your people wisely!!

112Pick the right people for these adventures: If you are a big enterprise software supplier, you are used to thinking in a certain way. But if you want to build applications for the individual and then have those individuals bring those into the enterprise...you will need to rethink everything you do. And some of your people can make that transition. But others canʼt. Pick your people wisely!

WHAT ARE SOME OTHER COMPANIES DOING?

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IBM

114Innovation Jam, wiki development, Drupal backing, immersive environment funding ($100M), 30,000 bloggers

: 20061008, Podcast re IBM

• theyʼre using podasts to replace expensive company wide audio conferences like education for the sales forceo [interviews with the top sales people]• a way to connect our people to the many experts inside our companies• 30,000 employees that are blogging [that number makes no sense]• corporate is looking for good communicators and then helps them blog and podcast• we also want to help people find the experts theyʼre looking for so that they can learn from them• easy to get lost in a large company• the demand side pulls top experts and makes them visible• once they launched internally, there was huge pull to do it outside• this is not like the old way of selling products and services – itʼs a different medium• Weʼre learning as we go• there is a bit of a technical barrier at the moment so we help people make this happen• this is really “influence marketing” as it is with blogging• [TA: I should be blogging, podcasting, and vcasting on web 2.0 and sharing that inside the company.]• podcasting is one more way to enhance community beyond the existing tools; • it is top down meeting bottom up but it requires companies to trust your employees• IBMʼs blog policy requires trust• how about governance? You donʼt have a command and control blog strategy you have a self governed model. How does that work?• Yes, it polices and governs itself. • Crazy people are not heard; Smart people are heard. Let the community sort itself out and find out who its leaders are.• Next five years in communication?o a lot of turmoil; transition from one world to another; web 2.0 is very real; read/write; platform for information generation and disseminationo corp and mainstream media will need to adjusto big media goes from 20 competitors to 100 million competitorso vcasting will be HUGE

GM:

115GMSLOW: • 21,000 ads were submitted, 40,000 commercials were emailed, 2.4 million page views were generated and people stayed on average 9 minutes on the site. • Risks: • In GM's case, 20% of the ads were negative and talked about global warming, the war in Iraq, demeaned the Tahoe's quality, or contained profanity or sexually explicit messsages. GMSLOW.

Freshbooks

116 - benchmarking

Amazon

117: * S3 and EC2 are storage and processing. They should not be very interesting. So why are people so excited? * Because the time from concept to delivery has been collapsed. We removed server hosting, contract negotitation, server infrastructure, etc. * We have removed the "muck"; You come up with an idea, you wade through the muck, and then eventually you get to working on the fun parts. * And then when you come up with your NEXT idea you have to go through the muck all over again. * up to 70% of your time, energy, and dollars for web-scale apps goes into undifferentiated, heavy lifting and "muck" * We want to swap the 70/30 to 30/70 (undifferentiated muck / differentiated work that makes you stand out). That will free up 40% for more creativity and differentiation! * Web scale computing should be elastic; fast; always on; rock solid; simple cost effective; pay per use. * It is being used by Xerox Global Services (S3, Simple Queuing Service and E3), Second Life; PowerSet (Natural Language Search) - now using EC2 as their back-end infrastructure; * Tagline: "We make muck...so you don't have to." * "We have been a low-margin, high volume business with aggressive cost structures for 11 years. I feel that that is the best and most defensible model because it doesn't have a soft underbelly that people can come after aggressively unless they're as good at it as you. " * Battelle: Why are you doing this? Bezos: We think this is a great business and we're good at it. We have three businesses: consumer facing, seller facing business, developer facing business. The consumer/seller businesses drive our revenues. The developer facing business will one day have significant impact. * Fulfillment by Amazon is a very simple service. We have a global network of fulfillment services. You can ship something to us and we'll receive it. We get it. We stow it. And then you can send more calls to us and when you do, we'll pick those out and we'll send those things to you. We're giving pay by the drink, variable cost fulfillment to the marketplace. This allows developers to use us by writing software, to treat this 10 million square foot network of fulfillment centers as a peripheral device like a printer. * Battelle: Sun tried to do grid computing before and failed. You are succeeding right out of the gate. Why? Bezos: We have a policy of not talking about other companies. But I'll talk about S3. We think that there are three reasons it is succeeding: it is pay-per-use, it is self-service, and it is VERY simple for people to work with. * Battelle: what is your cost of power? Bezos: Our biggest costs are not power, servers, or people. The largest cost is the opportunity cost of not fully using our facilities. And the same goes for our customers. The rest of the world is building data centers that they're only using on average 17% of the time. People are buying 747s and parking them 83% of the time! This doesn't make any sense.

CyWorld

118CyWorld Revealed, Hyun-Oh Yoo, CEO of SK Communications, owners of CyWorld

* We have 20M subscribers, 40% of the population of Korea (!); 96% of 20-29 year olds (!); 20B monthly page views; [Wow - those numbers are unbelievable.] * We are Myspace + iTunes + Google + IM + eBay in that we are offering social networkinng + music downloads + search + commerce engines. * Key success factors: young women in their early 20s were the early population; we brought young women (who didn't use the internet) to the internet. We made the entire system appealing visually to young women. * [So they went after non-consumers rather than trying to convince people to switch from competitors; they used the principle of "know your customers" (it's not everybody - it's young female non-internet users) and build the service to appeal to them; they also made it visually appealing which both fits their customer and also adheres to the principle in "A Whole New Mind" - beauty is just as important as function in this era.)] * business model: the base service is free...but charge for the personalization (downloading of wallpapers, gifts, avatars, etc.) o [The cell phone market could probably soon get away with this model. Give away the phone and the service and charge for personalization and ringtones only! This personalization/identity stuff is coming up more and more often.] * New service: Town Service is being used for companies, They also have an online marketplace. * Integrated with the number one IM service (NateOn) which is now overtaking (and causing a decline in) MSN. 2002:-20006: NateOn went from 0 to12M users; MSN went from 10 to 6M. WOW. That's a shocking number. Nice to see that Microsoft is getting some serious challengers on some fronts.

* Have now launched in China, Japan, Taiwan, and US * 3+ million users * Planning to launch in Europe, South Asia, and South America in 2007 * Our goal: "Connecting everyone to One Global Network"

Salesforce.com

119Marc Benioff, Salesforce.com, speaking on Enterprise 2.0 mashups.

* "Bezos' presentation summed up one aspect of our business. You have to move from being a killer app to a killer platform. " * We have an elastic database; 10 Terabytes, 500,000 subscribers * Bikramfinder.com: mashup of Google map and salesforce.com into a tool that allows you to find bikram studios. We didn't do this. Some third-party did it. We love demoing this. * iRows (embedded in App Exchange) o [It would make sense for any other App Exchange member to be able to integrate into the iRows spreadsheet so that they can pass data back and forth easily.] * We mashed up Skype as well (showed a demo of a tab where the contact list showed their Skype status.) * We now have >400 applications sitting on App Exchange; grab the app you want and it populates your workspace. * 1 floor of their new Siebel building will have cubes for mashup developers. $20K/yr per cube buys you a spot in our building where you can work closely with us to build your product that sits on our platform.

Side note: When I spoke to Michael Platt, Chief Architect from Microsoft at the New New Internet conference in Virginia, he told me that "mashups are the most exciting thing I have seen in years" and the Emerging Technology guy from SAP stated outright in the Enterprise 2.0 session at Office 2.0: "Mashups are the future of our [SAPs] business." You can't get much heavier data points than that to know that something very interesting is happening here!

BEA, Oracle, and SAP are embedding "community" in

their platforms

120Jive Software being embedded

37 Signals

121• maker of lightweight hosted applications Basecamp, Ta-Da List, Campfire• 200,000 users subscribed. Unknown number active.

Abebooks.com

122: • Abebooks - a privately owned company based in Victoria, Canada - is the worldʼs largest marketplace for new, used, rare, and out-of-print books, with a virtual inventory of more than 80 million books. More than 13,500 booksellers from 53 countries list their books on the Abebooks sites.• Abebooks facilitates up to 25,000 book sales each day• Booksellers load more than 200,000 fresh books onto Abebooks sites daily• The average bookseller lists approximately 6,500 books• Abebooks has high traffic sites, with millions of people visiting each month• Customers perform over 3 million book searches on the Abebooks websites each day• The Abebooks websites are: www.abebooks.com <http://www.abebooks.com/> www.abebooks.com <http://www.abebooks.com/> www.abebooks.com <http://www.abebooks.com/> www.abebooks.com <http://www.abebooks.com/>, www.abebooks.co.uk <http://www.abebooks.co.uk/> www.abebooks.co.uk <http://www.abebooks.co.uk/> www.abebooks.co.uk <http://www.abebooks.co.uk/> www.abebooks.co.uk <http://www.abebooks.co.uk/>, www.abebooks.fr <http://www.abebooks.fr/> www.abebooks.fr <http://www.abebooks.fr/> www.abebooks.fr <http://www.abebooks.fr/> www.abebooks.fr <http://www.abebooks.fr/>, www.abebooks.de <http://www.abebooks.de/> www.abebooks.de <http://www.abebooks.de/> www.abebooks.de <http://www.abebooks.de/> www.abebooks.de <http://www.abebooks.de/>, www.iberlibro.com <http://www.iberlibro.com/> www.iberlibro.com <http://www.iberlibro.com/> www.iberlibro.com <http://www.iberlibro.com/> www.iberlibro.com <http://www.iberlibro.com/> and www.BookFinder.com <http://www.BookFinder.com/> www.BookFinder.com <http://www.BookFinder.com/> www.BookFinder.com <http://www.BookFinder.com/> www.BookFinder.com <http://www.BookFinder.com/>• Corporate Information• The company was founded in 1995, and the Abebooks.com site was launched in 1996• European leader JustBooks GmbH was acquired in October 2001• Abebooks currently has 120 employees in Canada, USA, Germany, and Spain• Spanish antiquarian and rare book marketplace Iberlibro.com was purchased by Abebooks in October 2004• Price comparison shopping service BookFinder.com was acquired in November 2005.• How Abebooks Works• All transactions occur between buyer and seller; Abebooks never sees the book (a “low touch” model similar to Ebay)• Revenue comes from three sources:• 1. Monthly subscription fees that booksellers pay to list their books on Abebooks (i.e. a bookseller with 0-500 titles pays US$25 a month)• 2. Commissions of 8% on each book sold• 3. Payment service fees applied to Visa and MasterCard orders as Abebooks accepts payment (5.5% on each book sold plus shipping)• Revenue, Sales & Growth Facts• Abebooks has enjoyed consistent growth and profitability since day one. No venture capital has been required to fund growth.• The value of books sold in 2005 on Abebooks was $150 million US (“annual gross merchandise volume”)• Textbooks have become a major source of revenue in the past two years

Craigslist

123• destroyed the $12-20B? business of classified ads• self-service, community moderated, 19 staff = seventh largest web site in the world• Craigslist/Google Base: hard to recreate data turned into value

Flickr

124• 24 months (???) of dev to a $25-35M buyout,• over a 100,000 number of users,• with a team of 10 people.• 70 million photos in 2005• 2.5M users

Plentyoffish.com

125Plenty of fish = Plenty of cash ($12M/yr for one guy) - $30KUSD PER DAY from AdSense

McAfee's Three Phase Model

126• this is not a revolution, but it is a transformation; we donʼt know how big or how important

Transformation 1: IT imposing structureTransformation 2: Consumers wanting "unstructure"Transformation 3: Enterprise 2.0 - Reconciliation of the two worldsIt is the integration of the three arenas!Here is a whitespace opportunityUsersManagersOrganizations• Three Definite Trends:o (Enterprise 2.0 is not blogs and wikis. But if you add in RSS, tags, and lots more, then you approach it)o 1. we have not “seen the whole movie yet” – we donʼt understand how some of this will turn outo 2. what will bridge the very large gap between the rigid structured systems and the new unstructured systems?• [TA: links will bridge it! And besides, this polarity can exist in parallel – why worry about it?]• Will SAP reach out to the wikis? Will Socialtext build connectors to SAP/Siebel? Who nknows.• We will probably collaborate in an unstructured space and then refer back to structured data throughout the enterprise systems.o 3. these technologies will not be a competitive leveller. (?)• Are these technologies making us more alike? Or more different?• He believes that the newer tools differentiate companies from each other• Healthy company will be better• Dysfunctional ones will not improve with these tools.• Management needs to buy into these systems and put up with the negative things.• A company has to be ready to accept discord and negativity• how they react is CRITICAL and will be witness by all users• there have been zero reported incidents of vandalism in 4 years of Socialtext deployments• One big issue: people already have a lot of tools; adding another one is hard• DrKW: said to their staff “we have blogs and wikis – go crazy” (no big fanfar, no group training)• Documentum and similar systems are okay for things that require structure. Otherwise, not necessary.

• Prediction Markets are very interesting:o Rhode island company launched some internal prediction marketso built 3 distinct markets: bond (minor innovation), blue-chip (medium return), Nasdaq (huge risk/huge return)o put your idea into whichever market you think makes senseo find an internal champion to pitch your idea too if you can convince any of these people it becomes a projecto that champion identifies the necessary resources requiredo it is a distributed parallel innovation universe completely separate from their existing R&D effortso completely orthogaonal to peopleʼs normal day jobs

• Q&A: What are the ratios?o 100 uers = 90 lurkers; 9 contribute a bit, 1 contributes a lot.o del.icio.us works because a user gets value even if they use it on their own (they get backups of their favourites.o ensure that you “put the chairs in a circle” when you are building your systems. In other words, build the system for maximal interaction and to encourage the desired behaviours.o Article ref. The Economist re High Performance Teams a

Tapscott's Enterprise 2.0 model

127 = The economics of global collaboration!

Enterprise 2.0 is causing a crisis of leadership! It is the single largest change in corporate structure and operation in the past century.

Web 2.0 Summit 2006 - Day 2 / The Global Plant Floor with Don Tapscottby Troy Angrignon on Thu 16 Nov 2006 03:19 PM PSTDay 2 notes from Web 2.0 Summit in San Francisco, CA:

The Global Plant Floor, by Don Tapscott, author of the new book Wikinomics

o Just now publishing "wikinomics" - a new book about how mass collaboration changes everything o Carlotta Perez, historian, talks about all revolutions: excitement, bubble, bubble burst, actual deployment cycle. We're now heading into the real period of the web finally. o This is the biggest change to company structures, competition, and the way companies create value that has happened in the past hundred years! o My company has done large $500M syndicated research projects to understand this stuff. o I have been studying web 2.0 for six years now. o Web 1.0: HTML; standard for presentation o Web 2.0: web services; multimedia, geospatial, mobility, integration, "the thing"; it is becoming a platform for application building in its own right but is not a presentation layer. o The act of putting stuff on the web is "programming" the machine. o Enterprise 2.0 is about the economics of collaboration: + Why do firms exist? Transaction costs; the cost of coordination to bring it all together to solve a problem. Otherwise, everything would be built by individuals. It's cheaper to do things in the corporation than as a single person. + We moved from industrial age corporations to the extended enterprise, to the business webs (think of the IT global supply chain web) and moving to "mass collaboration" - this is MUCH more than crowd-sourcing or social networking. Social networking is becoming a new form of production. Self-organization What used to take millenia or centuries can now happen in years, months, or overnight. + BMW's X3 is built by Magna, a globally distributed group of manufacturers, not by BMW. This is about changing how BMW makes cars. + Goldcorp: published his proprietary geo-data on the web and held a competition for $500K to see who could find gold on the property they owned. For $500K investment, he found $3.4B worth of gold. His market cap went up to $10B. He had all sorts of crazy responses from geologists, mathematicians, etc. and got crazy solutions. # He acted globally; he shared his private data; he changed the game. o Mass collaboration: + Question: Could you create something other than an operating system with open source? Answer from Linus Torvalds: I don't think there's anything you couldn't create. + Red Hat: Linux; Spike source; open source applications are all good examples. + Zopa.com: peer lending is mass collaboration where people help other people build their businesses. + The California school board wants to open source and wikify all of their textbooks + Cambrian House lets a group of people come up with innovative ideas, grade those ideas, narrow the list to the best ideas, build those ideas, and then Cambrian House sells that widget for you and you as the contributor or team, profit from it. Click here to see how it works. [WOW. Bizarre concept. I wonder...how good will it be at manufacturing. Or selling/distribution?] + The Chinese motorcycle industry is an open source ecosystem + Ideagoras: cooperative markets innovating in business (see chart below + Second Life: the REAL story is not that their currency is pegged to the USD but the product is entirely created by its customers (pro-sumer) + So you could pro-sume clothing, mindstorm robots, + Biotechs and pharmas could have owned gene patents but they collaborated instead. + Mashups ecosystems will be collaboratively built on a massive scale

OUR NEW GOALHelp people make decisions collaboratively

across structured, unstructured, and task data anywhere, anytime that drive their

organizations towards successful outcomes.

128The integration of Web 2.0/next web into the traditional Enterprise Model and the task models into a much more comprehensive and holistic view is the real goal. (going where the puck will be); Our real goal is Enterprise 2.0 and larger; how do we help our customers make sense of all data (structured and unstructured) and make decisions on that? And do it quickly, easily, simply, at the push of a button, with data from their org and others, and make it accessible to everybody? In a way that requires little or no training? And that integrates fully with everything else they're using?

The Enemy is Lack of Understanding + Inertia

129Enemy originally is our inertia and the fact that we're an enterprise co in a web 2.0 world; but the real enemy is our lack of understanding of the scale/scope of change and our lack of understanding about this next phase - enterprise 2.0 AND THEN it will be our inertia after that.

There is only one question that matters:

Do you have the will to lead?

Do it now!

130