Thursday, April 28, 2005

Is Microsoft Charles Barkley?

In sports there have been countless athletes that have used tactics to get under their competitors skin whether through cheap shots a referee can't see or trash talk. Charles Barkely, Bill Laimbeer and others did this in basketball to draw fouls and get their opponent out of their rhythm and to do stupid things. This analogy came to mind when reading an article by Joel Spolsky on microeconomics that I posted about earlier about the hardware/software industry and how some companies have ignored economics in their decisions as they were blinded by their dislike towards Microsoft. Sun is a recent example but other examples include Novell, Oracle, Borland and Netscape. Unlike companies such as Intuit, Google and Yahoo who stayed true to their focus on their customer while competing against Microsoft, those companies and particularly their CEOs became obsessed with Microsoft/Bill Gates to their own downfall.

Monday, April 18, 2005

Ballmer finally gets that it helps to speak customers' language

Twelve years ago, I co-started vertical marketing at Microsoft when Microsoft was a recent entrant in the enterprise computing space with Windows NT and BackOffice. I started the Healthcare industry marketing effort which is now approaching the half billion dollar mark in revenue. Despite the revenue growth and 12 years passing, it's only now that Microsoft is making a major commitment to communicating with customers in a language they understand -- their industry's language.

When was I was in the healthcare marketing role, much of my time was spent translating the product group gobbleygook that was classic "speeds & feeds" sort of marketing talking about product features rather than benefits or proof of why your product matters. For example, healthcare has been through a shift to pushing care out of the hospital into outpatient clinics distributed throughout a community. The shift from "host" to "distributed" care has had dramatic implications for how healthcare gets delivered. Talking in these terms is much more meaningful to a healthcare CEO/CFO/CIO than the latest TPC benchmark. Speaking the customer's language was one of the reasons why we were able to drive growth in the healthcare market while having much less success in other industries where that didn't happen. Once Ballmer "gets it", watch out. It may take him awhile but he'll come on with a vengeance. IBM has a lead with their industry marketing efforts that will take quite awhile to close.

Update: Computer Reseller News gives additional information on the organization.

Odds against Rich Barton's (Expedia founder) Zillow

I have a hard time saying that the odds are against something that I don't know anything about beyond sketchy details I've read in the Seattle P-I and a real estate trade publication and more importantly when it involves someone the caliber of Rich Barton (founder and ex-CEO of Expedia). That said, I do know a thing or two about the consumer real estate business (I worked on HomeAdvisor and have been an active real estate investor) that leads me to believe the odds are against the strong group that Rich has assembled.

I knew Rich when we worked on sister sites when Expedia was still a part of Microsoft. We both worked for John Neilson -- one of the strongest senior execs at MSFT who unfortunately fell victim to lymphoma which claimed his life (As a side note, I'm convinced MSN would have been a success much earlier had John been around). Rich was a classic Microsoftie from that era -- super smart, driven but also had an entrepreneurial vision. I'm a big believer in betting on people and it's hard to bet against Rich.

The main reason I believe Zillow has a tough road ahead is that real estate is one of the more irrational industries from the standpoint of a tech entrepreneur. Real estate is more like the Healthcare industry than the travel industry or other industries Rich's team has worked on. In my career, I've worked in several industries (telecommunications, financial services, healthcare, entertainment, real estate, etc.). Without a doubt, the toughest nuts to crack were real estate and healthcare. They both share a common attribute of dealing with high dollar and high emotion purchases. Unlike other consumer businesses (travel, financial services, movie rentals, etc.), they aren't commodity products and it's easy for a consumer to become "irrational" from a pure economics perspective (e.g., how much would you spend on your child to keep them alive regardless of your financial situation). While industry fragmentation can sometimes be can an advantage for a startup, it can also bring significant go-to-market challenges. This is the case for real estate.

The other obstacle for Zillow is a lack of understanding of the nuances of the Real Estate industry -- it's not apparent any of his team has real estate experience. As I've stated in a previous post that discussed changes impacting the ad industry, not "getting it" can often be an advantage for a startup when attacking a new market. However, I don't think that advantage will play out based on what I've observed. In both healthcare and real estate, I've seen many "interlopers" come and go. They look at those industries and see massive dollars being spent and huge inefficiencies and see a colossal opportunity. The few that have had success blend a deep understanding of the industry with new way of looking at the market combined with innovative offerings.

If you look beneath the surface of some of those companies, you'll see they employ strategies espoused in James Surowiecki's book. A great example is a company run by my friend Ian Morris -- the CEO of HouseValues. There's much more than meets the eye that drives their success -- out of respect to HouseValues, I'll let you figure out the connections from what you can read about Surowiecki's book and in HouseValue's S-1. When Ian and some of the current HouseValues management team left MSFT a few years back, I can remember Microsofties and other tech entrepreneurs pooh-poohing HouseValues because they didn't understand the dynamics of real estate agents and consumers in the way HouseValues did. As their highly successful IPO has proven, taking an unconventional route is the path that has worked for them.

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Monday, April 04, 2005

What's Cellulose Ethanol & why should I care?

Given the rising demand curves for energy not to mention climate change issues, it's interesting to see startup activity addressing these issues. One of the efforts I'm excited about is Climate Solutions "Harvesting Clean Energy" program and related progress from companies they are helping to catalyze. Cellulose Ethanol is made from agriculture waste. While bio-fuels have been around for awhile, they are using the food product rather than the waste from farming. Iogen is on the cusp of building the first commercial scale production facility in Southern Idaho. Regardless of whether you are a "red" or a "blue", this is exciting to see. Check out articles related to this development.

North of Idaho, there are rumblings of Montana becoming the 3rd state (after Minnesota and Hawaii) to have a 10% ethanol requirement. One of the nice sidenotes is that it's a Republican-sponsored set of competing bills that have been catalyzed by a governor who is a Democrat.

Get your Jaffe Juice

My friend Joseph Jaffe recently took off the covers on his blog. He's always full of insights on the advertising world and particularly how the interactive advertising/marketing world is reshaping how marketers, agencies and media properties do their work. Add his blog to your RSS reader -- you won't regret it. I'm looking forward to his book, as well.

Saturday, April 02, 2005

Time as a commodity

"The chief goal of life has become saving time."

-Michael Tchong , Lead Consumer Analyst, Iconoculture Inc.

I like this quote as it applies whether you are talking about consumers or business decision makers, building products or ad campaigns that will drive the response you want.