Uber-Entrepreneur Jack Dorsey To Startups: Don’t Just Disrupt, Start A Revolution

Image representing Jack Dorsey as depicted in ...

Image via CrunchBase

From my Forbes.com blog The New Persuaders:

Jack Dorsey is a latter-day legend among entrepreneurs, and no wonder. Not only did he help found Twitter, where he serves as executive chairman and head of product development, but he’s also founder and CEO of Square, which is trying to foment a revolution in payments by allowing people to use their mobile devices as wallets.

Revolution, in fact, not simply disruption of the existing way of doing things, was Dorsey’s main message in a keynote talk this morning at TechCrunch Disrupt, a startup tech conference in San Francisco. “We need to change the name of this conference,” he told thousands of attendees hanging on his every word. Here’s a sampling of what he had to say, mostly aimed at dashing precious beliefs of entrepreneurs:

I never wanted to be an entrepreneur. I never woke up one morning and thought I need to get a ticket to San Francisco. I actually wanted to be Bruce Lee.

Actually I wanted to be a sailor, to explore the world. I wanted to be a tailor, to build things myself that I could share with other. I wanted to be an artist, specificallly a surrealist.

Along the way, I realized life really happens at intersections. Literally for me. I was fascinated by cities.

I thought about founders–in particular the Founding Fathers of the United States. They realized they wouldn’t get everything right at the start. There would not be one founding moment but many. A lot of the ideas they had at the time were wrong (slavery, for example, or women’s suffrage).

So there’s a massive amount of energy spent on the founding moment. At Twitter, not so. Companies have multiple founding moments. I consider CEO Dick Costolo a founder. He’s really reconsidered everything and made the company better. Same at Square with its COO. Same at Starbucks with Howard Schultz, who was not a founder. Marissa Mayer, not a founder of Google or Yahoo, but with the drive and smarts to create another founding moment at Yahoo.

So a founder is not a job, it’s a role. An idea that can change the course of the company can come from anywhere.

Science fiction writer William Gibson said the future has already arrived, it’s just not evenly distributed yet. Our job is to distribute the future that is already here. We need to make sure it spreads all over the world, as quickly as possible, and with the right values.

We have the change the name of this conference. What we really want is not disruption, but revolution. It pushes people to do the right thing. It doesn’t always have to be loud or violent. It’s just as powerful in its stillness.

So the key is how we recognize disruption. We want to distribute the future more quickly. We don’t want to just disrupt things and move them around. We want purpose. …

Read the complete post at The New Persuaders.

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Why Do Programmers Hate Internet Advertising So Much?

Facebook ad question (Photo credit: renaissancechambara)

From my Forbes.com blog The New Persuaders:

Another week, another pontificating programmer slamming online advertising. What is it with these guys?

The latest example is a steaming heap of linkbait from software developer and entrepreneur Patrick Dobson entitled Facebook Should Fire Sheryl Sandberg. That would be the chief operating officer of Facebook, whose purported crime is that she steered Facebook toward being an ad-supported company.

In Dobson’s telling, while Facebook cofounder and CEO Mark Zuckerberg was off at an ashram in India, onetime Google ad exec Sandberg mandated that Facebook would henceforth be an advertising company. Proof of her folly? Facebook’s now worth half of what it was at its IPO three months ago as it “continues to flounder in advertising hell.”

This, despite the fact that Facebook will gross about $5 billion in ad revenues this year, despite the fact that its current market cap is still more than $40 billion less than eight years after the company’s founding in a Harvard dorm.

Thousands of Web developers would love to flounder this badly.

Dobson’s preferred alternative is that Facebook should gradually phase out advertising in favor of–and I have to get technical here, because the bigger picture he provides is fuzzy–selling access to its application programming interface. That way, developers can build businesses like Zynga did on top of the social network in the way personal computer software developers built applications atop Microsoft’s Windows. From his post:

… There is massive value in the social graph and the ability to build applications on top of it. I believe the value is greater than all of the advertising revenue generated on the web to date. … What is the best way to monetize the social graph? To sell access to the social graph! … Developers can then figure out if advertising, or micro transactions, or payed access is the best way to monetize the social graph.

I’m not really sure what “selling access to the social graph” would be, though it sounds like the result could make Facebook’s many privacy gaffes to date look tame.

But the bigger problem is the persistent implication by tech folks like Dobson that advertising is beneath them, and beneath any intelligent human being. Now, I’m no huge fan of most advertising, and all too often it is indeed lame. But there’s no doubt it can be useful at the right place and time, and even when it misses the mark, advertising is a small, remarkably frictionless price to pay for a whole lot of free Web services.

The notion that advertising is evil, to use a favorite term of Google critics, or at least useless is a longstanding meme in Silicon Valley. It goes at least as far back as Google’s founding, before it became–right–the biggest online ad company on the planet. Cofounders Larry Page and Sergey Brin famously wrote in their Stanford doctoral thesis describing Google that advertising could pollute search results.

Why this antipathy to advertising? A lot of tech folks seem to believe they’re immune to the influence of advertising. More than that, they assume that no one else is much influenced by it either (despite ample evidence over many decades that ads do influence people’s attitudes and behavior). Therefore, the reasoning goes, ads are nothing more than an annoyance, an inefficient allocation of capital. Dobson accuses Sandberg of a “rampant lack of business creativity” that has “no place in centers of innovation,” later saying she should start an ad agency in Miami. …

Read the complete post at The New Persuaders.

How Retailers Can Benefit From Consumer ‘Showrooming’

From my Forbes.com blog The New Persuaders:

Showrooming, the practice of checking out products in a physical store and then buying them online, is a rising concern among retailers as smartphones and other mobile devices become ubiquitous. Various apps make it easy to scan a barcode to compare prices and buy a product cheaper online.

I’ve somewhat skeptical of the impact this has on retailers, in part because of my own anecdotal experience. Even more than I showroom, I research a product online–often at Amazon and other online retailers presumed to be the key culprits in showrooming–and then buy a product in a physical store because I need it now or simply want to touch a range of products, not just look at photos of them. In other words, it works both ways.

In any case, some of the most savvy brand managers are making the case that physical retailers can actually benefit from consumer behaviors that lead to showrooming, leveraging them into a marketing and advertising opportunity, or at least employ ways to head it off–without draconian techniques that may do more harm than good. Today at MediaPost’s Mobile Insider Summit at Lake Tahoe, livestreamed online, a panel offered insights into how marketers can do just that.

On the panel were moderator Carla Paschke, director of mobile innovation for marketing agency EngaugeMike Bloxham, executive director of the research firm Media Behavior InstituteHans Fredericks, VP for mobile business development for researcher comScore; Sloane Kelley, director of interactive strategy for ad agency BFG Communications; and Alexis Rask, VP and general manager of brand partnerships for retail shopping app Shopkick. Here’s what they had to say:

Q: How do each of you view the opportunities with mobile?

Bloxham: Mobile is the first umbilical media we’ve ever had. It’s deeply personal. One thing that’s really important to understand … is mobile use in the full context of their lives, other media. Mobile and TV are inextricably linked, but so are other media. We can’t look at mobile in a vacuum. People use their mobile devices to inform their thinking before, during, and after purchasing.

The idea that retailers should suppress showrooming is delusional. That ship has already sailed.

Fredericks: Folks’ usage of smartphones vs. tablets vs. laptops is different. Folks are using that PC during the course of the day. The smartphone is fairly steady during waking hours, because it’s very personal. Tablets show very pronounced evening-hours use. By and large, it is more of a home use device.

Kelley: Brands that get hip to this early can really rise above the rest.

Rask: We see two main trends. One is what to do about the in-store experience. What doesn’t get talked about enough is that arc from the couch to the store. At Shopkick, about two-thirds of our usage is couch mode. People are planning their shopping trip. They’re basically deciding: Am I going to make a left out of the driveway or a right out of the driveway?

Bloxham: TV dominates by far in the home in terms of share of mind. A lot of people also use another screen. That’s actually the first screen, not the second as we often call it. Radio dominates in the car, and there’s an opportunity to drive people to a coupon on their mobile device, like what they’re going to eat for lunch.

Rask: Mobile is the only medium where you can map a full path to purchase. …

Read the complete post at The New Persuaders.

Move Over, PayPal Mafia. Meet The Google Mafia

From my Forbes.com blog The New Persuaders:

PayPal, the online payments company that eBay bought in 2002, is legendary in Silicon Valley for spawning an incredibly talented group of founders, investors, and executives at startups that read like a Who’s Who of Web success stories. The so-called PayPal Mafia includes Tesla and SpaceX founder Elon Musk, LinkedIn cofounder, angel investor and Greylock VC partner Reid Hoffman, hedge fund and early-stage investor Peter Thiel, Yelp cofounder and CEO Jeremy Stoppelman, YouTube cofounders Chad Hurley and Steve Chen, and many more.

Now, it looks like a new corporate organization is moving in: the Google Mafia. With the surprise appointment today of longtime Google executive Marissa Mayer as CEO of Yahoo, it now appears that the Google Mafia could prove almost as powerful, though in a different way: It’s more of an executive mafia than a startup mafia. But these former Googlers are now in high-profile positions around the Valley and the larger tech industry, in very influential companies. …

Read the complete post at The New Persuaders.

How Facebook–and Its Advertisers–Can Make Money From Mobile

Cross-posted from my Forbes.com blog The New Persuaders:

If there’s one thing that gave investors pause about Facebook’s underwhelming initial public offering last month–besides Nasdaq’s royal screwup–it was that the social network has been AWOL from the hottest trend in tech today: mobile. Facebook admitted shortly before its IPO that it wasn’t making any money on mobile advertising even as its users increasingly access the service from their smartphones and tablets.

But it’s also quite early in the opportunities associated with skyrocketing use of mobile devices, whether it’s games or advertising or payments. Lucy Jacobs, COO at Spruce Media, a company that helps brands do performance advertising on Facebook, offered a brief perspective on what Facebook and brands hoping to use it for marketing can do to make money from all the people ditching their PCs for iPhones, iPads, and Android devices. Here’s what she had to say during a talk at AlwaysOn’s OnMobile conference in Redwood City, Calif.:

Only about 32% of the world has a mobile phone so far, she says, and most of them aren’t smartphones, so there’s plenty of opportunity. We’re currently monetizing only 1% of all ad impressions even though 10% of time is spent on mobile devices. Result: Ad rates are five times lower on mobile devices vs. desktops.

Facebook is well-positioned to monetize mobile, Jacobs says. Why? Very rapid user growth, large number of innovative developers, broad base of advertisers, highly engaged consumers, and apps that are essential utilities.

Facebook now has four formats, or locations, for mobile ads–in the news feed on the home page, in the news feed in mobile, on the right-hand side, and on the log-out page. And last week, it announced the ability to run just mobile ads instead of having to do desktop and mobile ads simultaneously.

The mobile newsfeed ads have really high engagement and good results, Jacobs says. Click-through rates are 1% to 5%, or 10 times higher than on standard Facebook ads. That suggests that mobile has a huge upside for Facebook, since clicks on its other ads are way lower than the average display ad.

However, conversion rates, or the rate at which people buy something, fill out a form, or the like, are one-third lower. She doesn’t say why. Other marketers and agencies have suggested that it’s likely people using their devices on the go, such as in or near stores, simply buy the product in the store, but that purchase doesn’t get attributed to the Facebook ad.

Jacobs offers several tips and tricks for brands using mobile ads on Facebook:

Read the complete post at The New Persuaders.

What’s the Next Breakout Mobile Startup? Here’s What VCs Think

Cross-posted from my Forbes.com blog The New Persuaders.

Mobile computing is arguably the most disruptive force in tech right now. Just look at what it did to Zynga’s stock today. Or what it has already done to Facebook’s and Google’s shares.

Today, a group of venture capitalists laid out what they think is coming for mobile investment this year–in other words, who’s going to disrupt whom next. On a panel at the AlwaysOn OnMobile conference in Redwood City (Calif.) were host Mihir Jobalia, managing Director at KPMG; Rob Coneybeer, cofounder and managing director at Shasta Ventures; Paul Santinelli, a partner at North Bridge Venture Partners; Sling cofounder Jason Krikorian, now general partner at DCM and the Android Investment Fund; Navin Chaddha, managing director at Mayfield Fund; and Aydin Senkut, founder and president of Felicis Ventures.

Here’s what they had to say:

Q: What are the opportunities and challenges in Apple’s iOS vs. Google’s Android?

Chaddha: With Android, even though it’s open, not having control is a big issue. If developers have an app, they go to iOS first, then they look at Android, but there are so many choices, phones. It’s just hard. In the iOS, iPad and iPhone are all the same–life is easy.

Senkut: iOS’s big advantage is monetization. If you want growth and high numbers, it’s difficult without Android.

Coneybeer: It’s a stable duopoly. You need to do both. But nobody’s talking about any other platform now. For developers, you’re looking at a five-year-plus duopoly.

Santinelli: In a few years, you’ll be able to do all development in HTML5. It will solve a lot of those fragmentation problems.

Q: Where are the most interesting growth opportunities in the next five years?

Read the full post at The New Persuaders.

7 Reasons Facebook’s Slowing User Growth Doesn’t Matter

Cross-posted from my Forbes.com blog The New Persuaders:

Facebook’s growth is slowing in the U.S.–a lot, according to comScore figures cited in a Wall Street Journal story this morning. The rate at which the number of U.S. users is growing fell to just 5%, down from 24% a little over a year ago.

Clearly the implication of the article is that this is a Bad Thing, and for many online companies, it would be. Not for Facebook, though. Here’s why:

* How could Facebook’s growth, at least in the U.S., not slow down? It now claims 158 million users, nearly three-quarters of everyone who’s on the Internet in the U.S. It’s mathematically impossible to keep up growth rates when there’s almost no one else left to join.

Read the complete post at The New Persuaders.

Online to Offline: How Mobile Payments Will Shake Up Real-World Commerce

With Google queuing up the debut of its mobile payments system on Thursday and Square announcing plans to replace the cash register and the wallet in one fell swoop, there’s a lot of interest in the use of cell phones to pay for things in the physical world. This morning, we’re hearing a bit more about this hot area of investment at a panel at TechCrunch Disrupt in New York, which you can watch by livestream. Exploring the topic are Stephanie Tilenius of Google Commerce and Payments, Alex Rampell of “transactional advertising” platform TrialPay, and venture capitalist Lewis Gersh of Metamorphic Partners. TechCrunch editor Erick Schonfeld is moderating.

Q: How do mobile payments affect daily deals and other local commerce? Tilenius: We call it the age of mobile-local.Consumers will be able to walk around and get deals. You’ll see us embedding offers throughout our mobile experience. Gersh: We could retarget consumers [with advertising] who were in a retail store. It could be Groupon having local pickup for offers.

Q: How can you make local advertising work, beyond Groupon? Rampell: Local businesses would rather get a check than a click, and they’re willing to pay for that. Tilenius: Groupon is a great model, and congratulations to them for creating it. But Groupon has tapped into one element of it. Ultimately it’s going to be about customer management.

Q: What’s compelling about Near-Field Communication (which allows consumers to wave a cell phone at a product to get more information or to pay for it), which Google is backing? Tilenius: The ease of use is compelling. You could see a product in Gap and if it’s not in your size, you could use NFC to order one in your size and have it shipped to you tomorrow.

Q: How soon will mobile payments catch on? Tilenius: It’s going to happen quickly. There’s already a ton of activity in this space (though a lot of it is overseas). In Singapore, everybody uses NFC for payments.

Q: How would NFC help local or e-commerce? Gersh: If you go to a local coffee shop and say I can promise you 1,000 new customers if you install this device, they’ll probably do it.

Q: What do you think of Square’s latest announcement? Rampell: Square is really competing with cash. If you want to make a $500 purchase at a flea market, this works better than cash. They can manage the fraud problem. Tilenius: Square isn’t trying to compete with Visa and Mastercard. They’re servicing really small merchants and displacing cash. It would work well to pair deals with that.

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