Author Archives: Ken Goldstein

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Facebook After The IPO

I bought a small amount of Facebook in the IPO.  It was a flyer.  It was unscientific.  It was counter-scientific.  It wasn’t meant to be a life-changer either way.  It was kind of like a lottery ticket, with a long time until the ticket would be drawn, and at the worst some remainder value on my ticket if I lost.

I really like Facebook.  I’m addicted.  I confess to being one of the first “grown-ups” on the site with an account going back to 2005 using a .edu email, investigating for business purposes (yeah, right).  I love to write and I love to read so Facebook is made for someone like me.  I tremendously enjoy sharing ideas, give and take, so that works for me, text more than pictures, it’s all good.  I marvel at the ability to stay in touch with people from all phases of my life, kind of like sending Christmas cards all year round, and without obligation to respond when I don’t have the time.  It’s a great platform.  I have invested a significant amount of time in carefully building my friends list (100% known to me, so don’t friend me if we aren’t at least acquaintances) and my much too long list of Likes.  I tried Google+ and it’s fine, I have an account and I post my blog entries there, but I’m not going to rebuild my Facebook network somewhere else, too much work, the switching costs are real.  Facebook is doing the job for me.  Not sure if I am doing the job for them, but we’ll get to that.

A lot of people asked me what I think about the > $100B valuation.  Here is what I wrote as a comment on Facebook in response:

The question is whether you believe FB can grow into its valuation. The answer is, who knows, but the multiples are very tough on any kind of fundamentals. No one has ever had a proprietary audience of almost 1B, that’s unheard of. The questions are: 1) can they hold them, or at least the valuable ones, without alienating people on privacy or losing them to the next big thing; 2) can they attack TV ad budgets with innovative, targeted campaigns that are both effective and not off-putting; 3) can they diversify beyond display ad revenue into transactions, research, and virtual currency; and 4) how will they deploy their cash for accretive acquisitions, particularly in mobile. That’s a lot to do, but at least they know what not to do having studied those who came before and puttered out. History (AOL, Netscape, the portal wars, et. al.) would suggest no, but remember when the smart money bailed on Apple and called it for dead. Suppose FB triples profit this year and next — well, at this price they’d be trading at less than 10x income, which is still aggressive, but not out of reality for a high growth company (today’s price is “augmented reality”). You’re paying a huge risk premium, so you have to believe they can deliver against that — which is a question no one can answer, hence the risk premium. If you think FB will perform like MSFT, AAPL, GOOG, INTC, WMAT and be one of the greatest companies of the early 21st century it’s ground floor, if you think it’s a fad, it will be an expensive adventure. Gee, I think I just wrote a blog entry!

Let me add a few more comments about Facebook.  I think they are doing a good job pushing the envelope on new horizons, but like all great software companies, they hit and miss.  Facebook aims to build community, which is noble, but it really wins on narcissism, that’s their secret sauce, and it’s primal.  People like to talk about themselves.  And post pictures of themselves.  We really, really do.  Okay, maybe not everyone, some just want to stay in touch with their kids halfway across the country, or meet new people with common interests, or reconnect with a pal from elementary school, or keep tabs at their own risk on an old flame, or support a political cause.  There’s a haute blend of secret sauces, but most of the recipe involves a chance to make yourself seen or heard where this previously required a lot more effort and guts.

The Like Button was brilliant, in one smooth swipe adopting the Fax Machine Factor — with each individual instance being more valuable as the aggregate network expanded exponentially.

News Feed was seminal, the turning point which bought them a shot at Built to Last.  Initially resisted, it was bold and visionary, a finishing move against direct competitors.  The true genius of News Feed remains the simple control that lets you quietly code out anyone’s posts that don’t interest you without hurting their feelings or having to drop them as a friend.

Facebook Connect was audacious.  Imagine if any of the portals had tried this earlier, expanding global registration beyond their own confines to widen the walled garden, and having that embraced by would be competitors!  All the web surfer experiences is they don’t have to create another user name and password, but if they want to do that, they still have the option (this is of course a two-edged sword, noted below under privacy).

Creating a robust platform for third-party app integration with an accessible and broadly supported set of APIs was sheer genius.  Facebook knew they weren’t going to be great at everything, why not let others create games and tools that feel like Facebook without being Facebook?

How do we know these features were game-changers?  Look how widely adopted and copied they have been.  That’s the rest of the digital social world confirming you got something right, all to your benefit.  On the other hand, true innovation at lightning pace means any developer will get some things wrong, and not be afraid of that.  Facebook has proven it’s in the club, with some less than customer friendly features that need attention.

Timeline makes little sense as a consumer experience, perhaps it’s meant to be something else, a comprehensive framework to compile marketing data, I don’t know.  What I do know is that it took away something useful, our ability to quickly scan someone’s self organized profile for affinity, and redeployed it as a pastiche of artifacts.  It reminds me of what a resume is not — it’s not a memoir.  All they had to do to make Timeline great was make it an option for those who wanted it and let the rest of us just keep our profiles.

The Facebook mobile app is not very good.  It was late to market, and the user interface appears cobbled together.  Data I/O is slow and cumbersome.  It does not update predictably or stay current with alerts.  It is still not optimized for tablet displays.

Privacy Settings remain pretty rough, albeit less so than one or two years ago.  There was even a joke with Muppet stand-up comic Fozzie Bear going around Facebook on IPO day declaring the reason the company went public is, “They couldn’t figure out the privacy settings, either.”  Granted the surprises of late have been fewer, but the third-party stuff via FB Connect can be woefully weird to control — do you really want your friends to see every song you’re listening to on Spotify or every article you’re reading on HuffPo?

This past week I spent a full day with some twentysomethings reviewing technologies that were and weren’t appealing to them for e-commerce.  The discussion of Facebook was unlike anything I had ever heard, immensely contradictory.  They could not imagine a world at any time in the future without Facebook, it was as much a part of their lives as food, which they currently couldn’t afford.  Yet they admitted they were using Facebook less each year that went by since high school, and they expressed vast mistrust for the Facebook brand, terrified of what would happen to all the personal information they had unveiled and were becoming predisposed to hold back.  How’s that for twisted logic?  Can’t live without it, using it less, and minimal trust for the brand — some action items there for the development and marketing teams.

It’s barely the second inning for Facebook so there’s a lot of time to recover.  Here’s my advice: win the trust war and you will go from being Good to Great.  Edward R. Murrow and Walter Cronkite helped CBS get there — even when there was little question that what William S. Paley wanted was what the Man Men were selling.  The namesake founder of my beloved corporate alma mater went on TV every Sunday night and became Uncle Walt, which resulted in many millions of folks subsequently vacationing at highly developed former swampland in Central Florida.  Facebook can win a big piece of the ad game if trust is front and center, central and foremost, and transparency is not buzzword.

A motto like “making the world more open and connected” is cool, but be careful that these don’t just become words in your press kit, literally about 1/7 of the world is watching.  Do it, don’t say it, win us over and hold us forever so your name goes on the list with the unforgettable.  Miss that and the stock price will be the least of your concerns.  Now you’re playing for legacy, where Like has to become Love.

I am purposely publishing this after a single day’s trading and before the market opens again.  With the FB stock price a hair above the IPO price for a deal everyone desperately wanted, it’s now everyone’s deal on a level playing field.  The only thing that will hold or improve that stock price over time is consistent greatness.  It’s commencement.  It begins.

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Manners Made To Order

Peter Bart, the long-serving studio executive turned prominent media industry journalist, recently wrote a column in Variety wondering where all the manners have gone:

A Zest to Text Lets The Rude Intrude

The irony of calling out the entertainment community on bad behavior is not lost. If you have spent any time at all in film, television, radio, theater, advertising, or any related endeavor, you have your own war stories to share. You have been humiliated, ignored, dissed, or berated at every level of your ladder climb from desk clerk to corner office. If you are not currently experiencing the abuse to your face, you are fully aware it is happening behind your back. This of course is in no way limited to showbiz—the rest of the business world including technology has its own flavors of belittling, it’s just a little more celebrated in Hollywood as norm. If you have never had the pleasure to do jumping jacks on this playground, just catch a few reruns this summer of the hit TV show Smash.

VarietyAlthough Bart largely ties the exponential run-up in the rude factor to gadget proliferation, the 24/7 expectation of real-time response, and the death knell of “nuanced conversation” in the creative process, I wonder how many of us are paying attention to our own slides into the primordial. The question is not are we targets of rudeness, the answer to that is as obvious as it is ubiquitous—and I don’t think it has all that much to do with texting and youth, especially if you remember the pre-politically correct workplace before Wang when an airborne stapler headed for your cranium often had to be ducked. The question I am more apt to ponder is how we let ourselves get seduced to the other side, becoming a violator when we know that’s not something we want to be.

We can still be hard-charging, we can still be Type A, but there is no mandate for acclaim that requires sloppy people skills. Presuming there is a roof over your head and ample food available to you on revolving credit, ask yourself in the long run what matters more: accomplishing a task however trivial, or building relationships that strengthen your standing? Certainly in the throes of immediacy a terse email might be released now and again, but what about the basics we were taught as children about The Golden Rule, lessons we now ostensibly pass along to subsequent generations who are as glued to their handhelds as we are?

Is it really that hard to save a viciously nasty email in your drafts folder and wait until morning before you elect to hit the send button?

Can you really feel good about telling someone you’ll call them tomorrow and then failing to do it ever?

Why are you checking your Facebook news feed during a sales pitch, regardless of which side of the desk you are on?

What good are you doing yourself continuing to say “Let’s have lunch” when you really don’t want to have lunch and have no intention of following through with any such invitation?

If you are meeting someone for lunch—business or personal—and you are going to be more than five minutes late, would it be possible for you to call or text, then apologize when you arrive? Better yet, barring a jack-knifed semi blocking all freeway lanes for ten miles in both directions, could you possibly leave a little early and be on time?

Depending on what stage you may have attained in your career, some of this comes down to the difference between what you are looking to achieve in terms of personal impact rather than measured achievement. That’s a see-saw that should shift over time to the beneficial, but there are pragmatic aspects of a well-mannered approach that might be useful to you now. Considering again Bart’s suggestion that “nuanced conversation” is a mauled victim of abrupt interpersonal dynamics, it is possible that listening less really is bad for business?

If you understand the nature of creative destruction as I often discuss in this blog, you know that we live in a world where teamwork generally matters more than individual contribution, and true leverage in time to market is almost always achieved by collaborative intelligence rather than ramrod dictum. In that sense, where an effective creative process is a function of shared give and take, the question becomes not how well we are silencing the noise, but how well are we listening.

Later this year I will be piloting a training seminar to help guide executive coaches with a practical approach to the corporate training work they do. I mention this in the spirit of disclosure and not for promotional purposes. In designing this emerging program, I have been inspired repeatedly by my partner organization, the well-regarded Coaches Training Institute (CTI). In the book written by CTI’s founders Henry Kimsey-House and Karen Kimsey-House with contributing author Phillip Sandahl, I discovered the following simple but profound reflection:

The absence of real listening is especially prevalent at work. Under pressure to get the job done, we listen for the minimum of what we need to know so we can move on to the next fire that needs fighting. The consequence: it’s no wonder people feel like mere functions in a whirling machine, not human beings. It’s no wonder that “employee engagement” is a serious issue in most organization’s today. Everybody’s talking, nobody’s listening.

The point is entirely actionable—a renewable creative process requires focused listening, much more than combative banter. No doubt the methodology of Constructive Confrontation pioneered over the years at Intel is as relevant as ever, but it remains a framework that is fully participatory. If you aren’t nurturing the dialogue all around, you are leaving money on the table.

Invoking the world view of popular ethics advocate Michael Josephson, I could easily migrate The Argument for Being Nice into a call for Significance beyond Success, but my sense is we all learn that well enough for ourselves over time. Instead let me keep it pragmatic.

If you are playing the short game and have convinced yourself the liquidity event is just over the horizon and that’s all you care about, feel free to be as rude as you want. Why not? You’re going to get what you want.

If you’re like the rest of us and have no idea where the forest trail will lead today or ten years from tomorrow, remember that kid on the reception desk probably will be running a company. History is on her side.

If it’s Friday night and you’re home from a hard week cataloging all the different ways you were kicked in the teeth the past week, ask yourself a simple question—how much forensic dental work were you responsible for doling out of late? And how much dialogue did you shut down that may have given you the answer to that very hard problem you’re still trying to solve on your own with the bomb clock tic-tic-ticking?

I’ll go out on a limb here, a little old-fashioned digerati, but what the heck—good manners are good business, and both of those will make you happier. Go easy on the texts and eradicate the gossip. Listen, there are good ideas all around you.

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Words, Words, Words… and Questions

My annual visit to the Los Angeles Times Festival of Books last month was as uplifting and thought-provoking as ever.  Any celebration of the written word and reading will always be close to my heart, and this may be the one time of year in Southern California where I am happy to see lines of cars backed up into the streets waiting for parking spots.  When tremendous crowds of readers and endless booths of authors come out in full force on a sunny L.A. weekend, it just feels good.  It also makes me wonder even more what age-old publishing is destined to become as technological change accompanies us deeper into the 21st century.

It really is hard to assess whether this is the best or worst of times for writers — perhaps in the true spirit of Dickens, it is both.  While it is heartening to see so many authors in person signing their tried-and-true bound paper volumes, there is little question that electronic publishing continues to shake the traditional publishing industry to its core.  Recent contention in pricing models has even brought the Justice Department to bear, arguing there may have been collusion among a number of companies that brought forth an agency publishing model to combat aggressive online discounting in the well-known wholesale-retail model.  Setting aside legal resolution of potential antitrust issues, the question in my mind for authors trying to make a living at their craft centers around price elasticity.  If lower electronic prices really will mean significantly more unit sales at higher royalty rates for a new wave of authors, the profession of writing can flourish.  On the other hand, if the product of writing becomes commoditized to a level where customer expectations of price points descend to micropayments — at the same time market fragmentation approaches chaos with a flood of unrestricted product — too few of these new authors will have the chance to quit their day jobs.  There are clearly two sides to this argument, and I am not sure any of us can predict how increased democratization of publishing will resolve itself economically.

Of course lower prices and more abundant offerings mean virtually unlimited choice at potentially impulse price levels for customers, which from the consumer standpoint is hard to contest as a negative.  There would seem little doubt this should be the absolute best of times for readers, given the astonishing amount of content so readily available in digital form, so much of it free, even legally so.  If the public turnout for events like the L.A. Times Festival of Books reflects continued devotion to the written word in whatever form it is delivered, there is reason to be optimistic — but again, I wonder.  Focused reading is challenging in a Twitter world that offers so many distractions and immense pressure on time.  A recent study highlighted in a Wall Street Journal column by Melinda Beck (“What Cocktail Parties Teach Us“) adds more fuel to the debate over just how good our brains are at handling distractions while attempting to encode information — in other words, can we really multitask?  This is an argument not likely to be resolved anytime soon, but it reinforces the notion that reading requires commitment, and if we allow that commitment to become a luxury, the best of times for readers is not necessarily a given.

An additional question then remains: If there is abundance of content and almost no impediments to publishing for virtually anyone with a keyboard, are we trending toward a more literate global community, or one that is so hard to comprehend it is more overwhelming than instructive?  To the extent that the availability of text continues to compound at exponential levels, the expanding online solution I keep encountering is curation.  While any magnificent library can be well served by organization and editorial review, I wonder if any attempt to curate the internet however noble can be successful.  We know the internet is a place that does not seek to be managed, yet browsing unending digital archives is anything but the pleasant experience we enjoy browsing analog book jackets in a local bookstore.  In the same way that good editing can help focus writing, good curation can help direct us to relevant work we might not otherwise discover before we exhaust ourselves digging into rabbit holes.  The key to successful curation requires the opening of doors we might not otherwise find, while not closing those we would nonetheless appreciate.  Curation is no small trick; it is an evolving art, and as billions more words find their way onto servers, leaving their discovery to search-engine optimization seems too limiting an approach to identifying relevancy.

One of the most interesting panels I attended at this year’s festival was a discussion moderated by L.A. Times Book Critic David Ulin on Narrative in the Digital Age.  This panel included editors from great new sites I was delighted to discover like Byliner, The Atavist, and Grantland.  These sites celebrate long-form writing, in many cases exploring the notion of stories that are too long for traditional magazine articles but not quite approaching the word count of standalone book manuscripts.  Each site offers an entrepreneurial approach to building new businesses where old-school approaches are collapsing, allowing new sources of income for writers who might not attract enough visibility on their own.  Whether these new businesses will succeed at scale is anybody’s guess, but the courage to explore real-world transaction models where too many web surfers have come to believe they needn’t have to pay for the time and expertise of an author’s passion is truly admirable.

So many written words, so much opportunity, so little clarity — no writer or reader will be left untouched by the digital shift.  At first blush it would seem that removal of barriers to entry in electronic publishing is tantamount to the elimination of constraints on distribution, but as long as visibility remains critical to sampling, that is not necessarily the case.  Breaking through the noise in any competitive environment will always be a challenge, and commercial media will continue to walk the line of art and enterprise.  It certainly can be argued that the written word is different from other stuff we lend or sell; it is our precious connection to the past and the breadcrumbs we are laying for the future.  If you get the chance to visit a book fair or take your kids to one, see if any of these questions catch your fancy.  Better yet, just pick up a book and read!

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Dodging The Greatest Hits Graveyard

I’ve kept a frequent presence at rock concerts ever since I was a kid. Back in the day, live rock and roll shows were reasonably affordable—even if you did have to sleep on the street to get tickets—because bands toured in support of the latest record they had produced. Live shows were a catalyst for selling singles and albums, pushed local radio play, sold t-shirts and memorabilia, and paid for the road antics of the bands who could live and party on “permanent vacation.”

The concert world today is obviously different because the ecosystem is so drastically different. There are still monster arena tours like U2, Springsteen, or the Rolling Stones 50th (gasp!) corporate sponsored anniversary. There are small gatherings of devoted fans at venues around 5000 seats for tireless road warriors like Cheap Trick or Chicago. There are nostalgia plays in casino showrooms or destination bars with one or two surviving members of one-hit wonder acts. And there are tremendous new stars like Adele who play the old game a new way and can still fill amphitheaters at top prices, sell plenty of music downloads, and inspire faith that the CD has a tiny bit of life left for the bygone tribe.

What I have noticed over the course of this music evolution is the underlying key to longevity and not moving down the food chain hasn’t much changed—the survivors tend to deliver a healthy balance of old and new material. This is no small problem, as the fans who come out to concerts are no doubt screaming for an artist to play their big hits. It’s natural. It’s satisfying. It’s a trap.

TSO2005A few weeks ago my wife and I went to see one of our favorite groups, the still somewhat niche band Trans-Siberian Orchestra, best known for their annual Christmas shows and the ever-present holiday single, Christmas in Sarajevo. TSO blends heavy metal power chords with classical music and electric violins, usually with an interspersed layer of spoken storytelling. Several years ago they started branching out from Christmas themes, recording and touring a fantasy tale called Beethoven’s Last Night. This was the first time we had seen the show performed live, and while it was familiar to us, it was not well-known to much of the devoted audience. That was pretty brave, I thought, to tour a concept album that was not necessarily top of mind with their audience, but then they did something I found even more courageous. Toward the end of the show, when they had finished playing Beethoven and the audience expected they would play some oldies, they instead played several entirely new songs that had not even been released online. No one had heard these songs except those who had seen the tour, and the applause following was as you might suspect a bit tentative. The nervous quiet during these songs was not because they were bad, it was because they were new. If you are a regular on the live music scene, you know that awkwardness—but without it, there are no new hits.

New music has to be debuted at some point, that’s why it’s called a debut. Audiences can be very tough on new songs, they pay good money to hear hits and the survival of any act is contingent on meeting the expectations of fans. Yet long-term success is equally contingent on innovating, and facing an audience with the unknown or unfamiliar is always a daunting prospect. Who would willingly trade thunderous applause for quiet, polite clapping? The greatest acts know they have no choice.

Most of the hot Top 40 bands in the 1970s and 1980s would periodically release Greatest Hits albums, mechanical collections of their charting singles, usually pushed by their record labels for bankable cash acceleration. Some of these became all time bestsellers, notably The Eagles and Elton John. The question I always used to wonder when I handed over my cash for a dozen song vinyl collection was whether this was the end of the band or the beginning of a new chapter. For too many, we know how that played out, and we know where those bands are playing today, if at all. A Greatest Hits or “Best of…” album was easy money, the equivalent of predictable thunderous applause. Pushing out new work would remain the heart of risk, and the genesis of going to the next level.

Nothing about this cycle is unique to music. Business is the same, especially technology wrapped as consumer products. You need to play to your familiar success, the current incarnation of your brand, but the moment that catalogue is fixed, you’re doing dinner theater rather than headlining at Carnegie Hall. Think RIM with the standing ovation worthy Blackberry, Kodak and Polaroid with endless scrapbooks of silver snapshots, perhaps now Best Buy longing for a different curtain call than their former contender Circuit City. They all climbed the charts, but staying there remains a different story.

Steve Jobs liked to say that he never believed in focus groups, because it was not the job of customers to tell you what they wanted—how could they know what they wanted when it hadn’t yet been invented? No civilian could concretely describe iTunes, the iPod, the iPhone, or the iPad prior to their release. You can only imagine how many pundits prior to the success of these inventions could tell you of their impending doom solely on the basis of unfamiliarity. Of course Apple never stopped marketing its core line of computers during this unbelievable expansion of reach, they were still playing hits while composing new material and seeding it to the faithful, those with whom they had established profound affinity and could ask to trust them further with the unknown.

I also don’t think it is a coincidence that Steve Jobs was a huge fan of The Beatles, who in an active career that spanned all of about eight years never stopped putting out new material, took themselves off the road to focus on composition and the creative process, then reinvented their sound with almost every album, including a few radical pivots like Sgt. Pepper. Is it counter intuitive that the actual career of The Beatles was so short despite all that new material and no Greatest Hits collection until after their break-up? Possibly, but if impact is the name of the game, it is hard to dispute that The Beatles succeeded most of all at avoiding that most dreaded of dead-ends, The Greatest Hits Graveyard. Their incomparable legacy remains vibrant because they pushed themselves so hard to be innovating all the time while crowd pleasing.

Celebrated descriptors like “Built to Last” and “Good to Great” are hard-won praise tied to nimble companies for navigating the same difficult balance for so many years of reinvention. It’s a lesson in courage and vision that is as difficult to learn as it is to replicate, but it is that very bravery that can guide any individual career from ordinary to enviable. Facing the anxious reception of the untried might not be pleasant when a clear alternative is available, but it’s the only trail that bypasses the one-hit wonders.