Inside Linkspank

Representativeness Bias in the Tech Industry

2008-06-20T09:17:00.000-07:00

In business school Dick Thaler taught us about the representativeness bias, which could be crudely stated as the bias of over-weighting everything you're familiar with when making judgments, estimates and guesses about stuff. Dr. Thaler convinced me in class that we all fall prey to this bias far more often and with a greater deepness of error than we imagine, even after the bias has been explained to us.

Dick Thaler taught us about representativeness bias

For people in the tech industry, the representativeness bias can lead to (1) an over-estimation of the penetration of a product or service, either in awareness or usage, and, on the flip side, (2) an under-estimation of potential market sizes. As someone in the tech industry, you are a techie and you know lots of techies. Hence when all the techies you know start using a website, say Twitter, you overestimate how much people use Twitter or even know about Twitter. On the flip side, you underestimate how much Twitter has at stake to win by capturing the uncaptured market, or how badly some other service could thrash Twitter by grabbing the uncaptured market.

less of a big deal than people say
(though I wish them luck)

To stick with Twitter for a moment: how many people use Twitter? About a million. If they were all in America (which they aren't), they would number 1 American out of every 300. Hey, that doesn't sound like very much! How much of the remaining 299 out of 300 Americans do you think have heard of Twitter? Hint: *much* less than half! In other words, no one knows about this service, given that it's supposed to be something that any old person with a phone and friends can enjoy. Now, I like Twitter. But this is a service that is supposed to be as neat and as of general interest, as, say Facebook, which has 80 million users. If you needlessly chop a huge portion off that number to be "conservative," you have a potential market for a Twitter-like service of 50 million people. So, in user accounts, Twitter has penetrated 2% of its potential market. Basically, it's sucking big time. You'd be inclined to ask yourself if it's designed wrong, marketed wrong, or environmental factors are against it. Some conclusions: (1) Twitter is overhyped; (2) the idea of trying to build a better Twitter is undervalued. Now I don't mean to pick on Twitter exclusively. It's true for any site you like, to varying degrees. You can even say it about Facebook. Facebook's membership -- again even if you inflate it by counting everyone as an American -- compromises about a quarter of the country. That's a heck of a lot of people. But it's also outnumbered 3 to 1 by the non-Facebook users. For a site whose goal (according to me) is to be entertaining enough to compete with sitting around and watching television, it's a massive but still quite incomplete advance.

With a relentless focus on the mass market, Jobs avoids the representativeness bias of techiedom and can think big, score big

A great example to the contrary is the iPhone. As you may recall, Steve Jobs made some pretty bold sales forecasts for the iPhone before it was launched. If iPhone had been viewed in terms of the "smartphone" market, Jobs would have seemed crazy. But he was thinking correctly. You could say that the smartphone market was like Twitter - cool, but nowhere near the size it was supposed to be. He wanted to go for the real market, which was more of a Facebook type size (to continue the analogy). Of course, don't go saying that "everyone" knows about the iPhone now! ;-)

This logic inspired my foray into Linkspank. A tech insider may think of the competitive arena for link sharing, social news, or whatever you want to call it, as saturated. But the reality is quite the opposite. One of the biggest sites in this area - Digg - has only a few million users. Compared to the size of the market -- for really any person you likes YouTube, reads news on the web, or gets or receives email forwards is a potential user of such a site -- Digg is a little sniveling baby.

It IS true that the small minority of people who use Twitter, for example, may be different from the other 97-99% of Americans in some meaningful way... but I'll leave that point alone at this time.

Here's another, slightly more fun example. You know those "viral videos" on YouTube and elsewhere that "everyone" has seen? The all-time most viewed video on YouTube, the Evolution of Dance:

It has been viewed about 90 million times, which is say about 90 million people. By comparison, an estimated 140 million people view some part of the Super Bowl each year. So, while it's impressive, it still falls a bit behind the Superbowl Halftime Show (estimating, since that's not what the previous figure refers to). And that is the number 1 video - the number of views drops off VERY quickly as we go down the list. Still in the top ten is the "laughing baby video, which has a mere 50 million views:

It's pretty funny, and a lot of people have watched it, but unless you live on a special techie-only planet, you know more people who HAVEN'T seen this video than you know who HAVE seen it. Fewer than 1 in 6 Americans has seen it (once again, with my grotesque the-world-is-America math).

People like to talk about the magic of a technology that has enabled 50 million people (if views = people) to watch something filmed casually in someone's kitchen. And it is magical, I agree. But looking at the numbers closely turns the viral video concept a little bit on its head. Our popular notion is that something catches fire on the web and then "everyone" sees it. But the reality is that sharing is still rather inefficient, and it's more right in many respects to think that "no one has seen anything." :-)

Linkspank addresses this problem in a few ways: it lets you share more videos and links with your friends, without inconveniencing them (since they can manage their Inbox and email settings). You can also see which of your friends have already received a spank. So rather than being a part of the problem, be a part of the solution (haha): join the spank and spank this page to your friends, so they can read this nifty article... and catch up on the Evolution of Dance and the Laughing Baby.

facebook's iPhone app is OKAY

2008-05-02T07:55:00.000-07:00

For the latest couple days my iPod Touch has been grafted onto my body, in my brain, forming a Voltron-like monster who constantly browses the web and does pretty much anything you can do on the iPod Touch.

You call that a knife?

The result will be an iPhone app that rivals the best ones out there. Stay tuned, and practicing tapping things to build your endurance.

Sharlene would like to be added as one of my friends!

2008-04-30T19:16:00.000-07:00

I got a MySpace friend request from Sharlene.

I don't recall ever meeting her or talking to her in any way shape or form, but she is pretty cute!

Plus she has personality to back it up:

Ah, it's kind of fun. Since most of my friends don't do much on MySpace it's nice to meet a whore-bot every now and then. Maybe I'll let her catch a glimpse of my USB dongle...

The Hierarchy of Needs, and Entrepreneurship

2008-04-29T15:24:00.000-07:00

The Hierarchy of Needs

This is pretty random, but I was sitting around today and I got a couple ideas about Maslow's hierarchy of needs:

People often frame decisions to start a venture in terms of risk - the comfort of the entrepreneur with taking risks. The hierarchy of needs is an interesting alternative. When you are healthy, safe, loved, esteemed (and you feel this way), it's time to "self-actualize," which may be achieved through a venture.
Some of the emotional or cognitive conflicts of pursuing a venture could boil down to where you are in the hierarchy. If your venture fails, are you "safe" or are you going to starve? Are you doing it for the esteem of others, or your own fulfillment?

This is maybe the first time I found the pyramid interesting. Anyway, just an idea. Here's an example of why it could be too facile:

High Self-Esteem Isn't Always Healthy

"People with fragile high self-esteem compensate for their self-doubts by engaging in exaggerated tendencies to defend, protect and enhance their feelings of self-worth." Like what? Blogging?

everyone deserves an iPod Touch, including me

2008-04-28T17:19:00.000-07:00

So many things about this picture amuse me

I got myself an iPod touch. First, I wanted one to test our budding Mobile Spank on it (because to date I've been doing my mobile browsing on a Nokia N95). Second, we're going to be giving away some iPod touches and iTunes gift certificates soon, and I realized that having and using the touch would allow me to take some videos of how fun it is and also make sure I personally understand the iTunes process. (Believe it or not I'm not currently an iTunes user; I get my kicks from Pandora.)

Which is all very exciting to me. About a billion new things are coming on Linkspank soon, and now I get to spank from yet another device. Bitchinnnnnnnn.

Plus, apparently I can use it as a phone too:

Turn Your iPod Touch into an iPhone [Feature]

Walden Pond, thoughts on the tipping point

2008-04-27T12:25:00.001-07:00

I'm about halfway around walden pond, thinking about individuality and
the tipping point. If a business is characterized by tipping point
logic, it's anyone's guess as to how it will play out. Small changes
make too big a difference. The success of the business is based on
nonlinear factors. It's chaos math at play essentially. For linkspank
you can put it this way. People try linkspank and they basically like
it. Some people like it am awful lot. Many of those people haven't
recruited any friends though - despite the fact they like the site and
would be pleased to have friends active on it. Now if you had a
situation where each me those people brought one friend to the site,
the community would grow very very quickly and in fact it would be
about as good as it gets for a site like linkspank. And some
relatively small changes could make some spankers invite just one more
person (though it's hard to know what those changes are). So the
strategic imperative is to find those little differences. In light me
this you can see why luck is a huge factor for all such businesses
whether they "succeed" or "fail". Personally the luck factor doesn't
attract me. Chess is one of my favorite games because there is minimal
luck involved. But i am passionate about so much that linkspank stands
for - using the web to organize and share information, bring smiles to
people, play around and play a new kind of game, be more efficient,
discover cool new things - that it's perfect for me. Being at walden
is a nice reminder of individuality, which is so important to me.
Entrepreneurship requires it, not because you are "working for
yourself", but because you are by definition pursuing an opportunity
that the rest me the world has passed over- your business is an
embodiment of a difference of opinion with the majority. Ok, i'm back
at the front of the pond. May you have a good sunday and know when to
disagree with others. :-)

--
Sent from Gmail for mobile | mobile.google.com

percentage gains

2008-04-26T19:46:00.000-07:00

Dilbert Comic for April 19, 2008

Our Revenue is up 1,000,000% haha :-)

Some people say that any decent web startup should be growing 25% per month in usage. I sort of agree. But you start puny and you're trying to get very big (even if not huge). So since when is this a linear game? One of the points of Tipping Point is that you shouldn't be thinking in terms of linear growth, but rather making the tweaks that could lead to the magic formula.

Mobile spank coming soon

2008-04-18T18:16:00.001-07:00

Quite soon we'll have a mobile version of linkspank that you'll see
automatically whenever you navigate to the site on your phone. The
goal is to enable you to read your spanks while you are mailing and
browsing on the phone. Also, if you find a link you like on your phone
you'll be able to click through and spank it. It will be simple yet
awesome i believe, and a big step up in what's available even for
iPhone users. On the phone, it's "difficult" to copy a link to share
with someone. We are fixing this problem and helping the cause of
social procrastination by a billion. Let me know if you're interested
in being one me the first users.

--
Sent from Gmail for mobile | mobile.google.com

Code

2008-04-18T15:58:00.001-07:00

Code

--
Sent from Gmail for mobile | mobile.google.com

Publishing Features

2008-04-17T07:43:00.000-07:00

We have some publishing features launching soon. I'm playing around with ways to publish your spanks in different ways. You'll hear more about it soon!

Today's experiment: publishing a particular spank on your site to look a bit like so:

On Being a Nomad

2008-04-16T17:53:00.000-07:00

A couple days after declaring to my facebook friends that I was "home, taking a break from being a nomad," I saw this.

Boy is that true for me. I have been visiting cities for 5-10 days, working, spending time with friends, getting opinions and advice on Linkspank. I started to envision a life like that in 2001, shortly after getting my first cell phone, when I was living in Europe. Now I'm living the dream. As the article points out, it can be done without having a lot of money. But so many many things are more important than money... to me at least.

the very first video blog post ever.

2008-04-14T12:54:00.000-07:00

What makes a good video blog?

I ask you, after admitting my ignorance. Click through the video to comment your wisdom and subscribe, and the world shall be enriched.

And now, some real art. Found at Diesel Cafe. I need to credit the artists but I don't know who they are.

June Goal and Funding

2008-04-06T21:15:00.000-07:00

I had a meeting today with a classmate from Chicago GSB and we went over the Linkspank pitch and discussed funding stuff. The pitch still needs some improvement but I'm happy with how it's coming along. The business model is laid out a bit more clearly too and some of the questions from the Investor Roundtable a few weeks ago helped me. Facebook makes about $5 of revenue per user per year based on advertisements. With its current activity, Linkspank would make about $1.50 per user per year. So you set the baseline for revenue that way and make arguments at growing the $1.50 to $5 and beyond, while keeping costs lower than a Facebook say.

His insights were different insights though, and they were quite helpful. He strengthened my resolve to gun for 10,000 spankers ASAP (June is the goal). So returning from Chicago I'm quite refreshed to prosecute the many prongs of this growth plan!

a rounded element.

2008-04-02T08:47:00.000-07:00

Those roundy buttons are a small new experiment

This is a pretty microscopic issue, but it's a little piece of shared thinking lovingly from me to you.

In setting up the UI of linkspank, I wanted something that was clear and non-trendy. To this end there has been little in the way of rounded elements, which are cute but maybe a bit cutesy too.

Now though I'm trying to highlight that the spank and more buttons are buttons, so we're playing with the rounded corners. The size and redness of them appears to be appropriate for the inbox, but a bit overwhelming perhaps on the browsing pages where there are lots of spanks. Generally they are helpful for the newbies, a bit outspoken for the experts.

Smack Talk, Big Talk

2008-04-01T12:05:00.000-07:00

I've scheduled some smack talk to appear on the blog soon. Some of it will be directed against others, as proper smack talk is.

You? If you're our competitor, probably. More coming Soon

First, though, I will engage in some Big Talk.

Our Next Goal: 10,000 Spankers by June.

Daunting and difficult. We currently have 2,000 spankers. So we are looking to multiply by 5 or so, in three months.

Can we do it?

Your momma can sure do it.

The Ad Model I Want: More like Gmail, Less like AdSense

2008-03-25T20:36:00.000-07:00

Linkspank has no ads on the site, but if and when we ever put any on there, this is what I want.

NOT: Traditional AdSense style

Ads based on content of entire page
Ads driven heavily by words in URL and page title
Ads load pretty much only on page load

WHAT I WANT: Ads behaving like Gmail Ads

Ads load specific to a portion of a page (e.g., a Gmail message)
New ads load when a new page loads (e.g., a Gmail message)
Ads don't care so much about the URL or header.

This would be useful in particular for the Linkspank Inbox, where you pop up messages of interest to you. If you have tips on the subject, let me know! :-)

We have a really awesome feature coming.

2008-03-23T19:31:00.000-07:00

An update of the linkspank system is upcoming soon. There are some cosmetic changes and some boring or moderately interesting features.

I can't wait for our "new feature" to be fully operational

But also coming down the pike is a really cool, really super new feature. It doesn't really have any precedent so we'll have to see if the Procrasti-Nation of Spankers digs it or not (and it may take some tweaking). But I can't wait to try it out!

Top Ten Reasons to Go to the Spank Party on Thursday

2008-03-11T18:13:00.000-07:00

10. It’s the best thing going on that night in the Boston area. Editor’s pick on Going.com and Yelp.com.

9. Great support for Linkspank.

8. This is a one time deal.

7. Drink tickets.

6. Schwag. Some real nice freebies.

5. Sweet location.

4. There are spank girls.

3. There is a Spanking booth.

2. You can play a wii on a projector screen.

1. You can take the Wii home.

For all the full benefits, rsvp at www.linkspank.com/party

Data and Reflections on the last monthly newsletter

2008-03-06T18:02:00.000-08:00

Recently I listed Constant Contact as a top tool for entrepreneurs. Last week I used it to send February's edition of The Monthly Spank: Surf your Way to Hawaii by Skilled Procrastination (where, you'll see on the link, it's also now archived).

We recently sent this amazingly sexy newsletter.

In this post I'll share some of my first experience and divulge data specific to Linkspank with a boldness that pretty much no one else in the Universe has.

Here's how the newsletter did:

That is, our newsletter was opened by about a sixth of recipients, and about a sixth of them clicked on something in the newsletter; so our open rate was 16% and our CTR (click through rate) was 18%. Anecdotally someone told me that an open rate of 16% was pretty good /average, and there are some old numbers claiming that 8% is an average CTR, which would make our CTR pretty good. Of course, we shouldn't be TOO impressed by that, because our Monthly Spank goes to registered spankers - people who have specifically opted in to Linkspank. So really I think we should be shooting for a much higher open rate and CTR rate.

Or should we? Consider the call to action of the email: Surf your Way to Hawaii by Skilled Procrastination. As indicated by this title, the primary message of the newsletter was about the contest. Realistically, the percentage of spankers who are going to consider gunning for Hawaii will be easily less than 50%, almost certainly less than 30%. So our open rate of 16% maybe is more accurately considered an open rate of 50% or so within our target segment (the one third of spankers who might consider gunning for Hawaii), which would be an insanely high open rate.

The CTR is less ambiguous. People have opened the email because they have some basic interest in the subject. From there, the question is whether we entice them to click. When you put it that way, I feel that the CTR is the main area for improvement in this case: surely we can get more than 1 in 5 who open the email to at least click on something! ...when, in fact, the Monthly Spank was asking much more of them - namely, to complete the checklist, spank on the email, and so on.

So the CTR was the main failure. From here, I dive into more speculative terrain. I think we could have improved in the following ways:

Guide the experience more. There were a lot of links in the Monthly Spank, while the call to action was specific and guided. Essentially we were making it easy for people to get lost. Only 27% of those clicking through "started" with the link we gave them to start with - the Orientation Page. Which invites the question, Why did we even bother providing the other links? We probably shouldn't have.

Rather than providing three steps here, next time I'll try providing one link,
which guides the experience from there

Of course, this takes guts-- sending an email with basically one link. But I think the more you think about it, the more you will agree that it's the right way to go. When people right emails with a bunch of links, I think they are either being chicken about the call to action, or maybe there is no call to action and they are just being informational (in which case a newspaper-like profusion of links makes sense). (I would question whether anyone using Constant Contact is really ever doing the latter goal but whatever.)

People are whipping through their inbox. They give any newsletter they open a brief moment, usually with the intention *not* to click anything but just to give it a glimpse. Hence you want a clear, obvious, seductive link to lead them away from their inbox, into a magical experience where you induce them to get spanky.

In retrospect, the call to action was mixed, which couldn't have helped the cause. Was the call to action really "spread the word about Linkspank" or was it "win the contest"? Surely the ideas are related, but we needed some better Pyramid Principle thinking here with an idea at the top. To make things worse, the call to action that was first in the list (completing orientation / spreading the word) was opposite that of the title (win the contest).

Were I to do it again, I would have focused on winning the contest. I would have cut the intro section, and shaped it as supporting text that explained that your procrastination, Hawaii-winning efforts not only further your sunbathing chances, but also support the startup, enrich the community, and spread the word to friends who will forever be in your debt and love you.

We'll see if we get those numbers up in future months!! As for you - winning a Hawaii trip all starts at the Orientation Page, which will educate you and win you points. :-)

Top 10 Tools for Entrepreneurs

2008-02-28T12:29:00.000-08:00

Based on my Linkspank and prior experience, these are my top 10 tools that I would recommend to another entrepreneur without knowing anything about his or her business.

Here’s the countdown:

Tool #10: An all-in-one printer. Mine is an HP. The need for this is a vestige of the old fashioned world. But hey, you need to print stuff, fax stuff, and SCAN stuff. Scanning stuff is awesome. And it’s a great substitute for faxing things, especially if you don’t have a land line, because who needs that caveman stuff. Scan it, email it, and then you have a record as well.

Tool #9: An iPhone, Nokia N95, or Blackberry. They are not equal, but the tradeoffs among them are tough to settle depending on your needs. The ability to capture video with a N95 is pretty awesome. And taking pictures (and uploading them to Flickr or wherever!) tends to come in handy for guerrilla marketing, and solves the problem of owning a camera but never having it on hand. But my N95 randomly turns off, sometimes when I’m receiving a call. File that under the Bad Feature category. iPhones don’t have that feature. Using an iPhone puts you in a constant state of arousal, which is a I guess a plus and a minus. All three are needed because you need to be plugged in to the Matrix. People cite the addiction factor: have one and you can’t escape the internets. But I think if you have a little control it can be the opposite: having these puppies can enable you to stay away from your computer longer, because you can check in without booting up.

Tool #8: Google Docs. This online document and spreadsheet system is far from perfect. But Word increasingly blows chunks. Meanwhile, Google docs is pretty awesome when it comes to collaboration. You can edit the same doc simultaneously with someone else. And collaboration is really the essence of existence. All the fancy features of Word? You don’t need them, because you aren’t publishing anything with this tool (other tools for that on the way).

Tool #7: Constant Contact. I just signed up for this service yesterday so maybe I'm overly pumped about it. It’s so clearly the way to go if you have customers or people that you would like to email on any regular basis. It’s a reliable way of formatting sending HTML formatted messages, managing contact lists, being generally considered reputable by humans and spam filters, endearing yourself to readers with a quick unsubscribe option, and tracking the effectiveness of your communications.

Tool #6: Photoshop. This product is absurdly expensive, and absurdly difficult to learn. But I can’t even begin to fathom how anyone would get by without it. You should have Photoshop if any of the following are true: you have a logo; you have a website; you publish documents; you have schwag. Sure, you could have someone else take care of this stuff for you. But as CEO you are probably Head Marketer and these functions can be pretty core to it.

Tool #5. Your Blog. I don’t really like any of the blog services a TON, but Blogger has suited me ok. (Though composing and adding photos in here makes me want to kill myself.) Unless you have opened a business as an independent intelligence operative, you need a blog. Everyone’s holdup is wondering whether it’s really worth the effort. It is true that a LOT of people still don’t really know what a blog is, even when they visit one. (This is a blog by the way.) But here are a couple reasons why you must have one. First, marketing these days is complicated, and all the best ways of marketing are basically untrackable. You have to give up on being able to know exactly what the payoff is for all your actions. Instead, you figure out your strategy and go with the things that are in strategic alignment with it. So, if rapport with literate humans plays a role in your strategy, you write a blog. Second, writing shapes up our thinking, and it’s nice to have a clue about what we’re thinking.

Tool #4. Social Networks. Blah blah everyone talks about this. Some of the blog thinking applies here: it’s tough to measure the efficacy of all the things we do. But you should be on these puppies. Which ones depends on your business. I’ve used LinkedIn for job postings with some success. Probably every entrepreneur ever should be on MySpace and facebook. But it depends a bit on your business. E.g., if you’re a yoga teacher, you should be on Zaadz. Facebook is quite relevant to our user base and that’s why we have the best facebook app ever, enabling to join the Spank through facebook, login through facebook, and spank your facebook friends. Linkspank was recently written up as a way to be a part of the buzz.

Tool #3. Gmail. Email is pretty important, you know? Linkspank is an email-related business, so I have made it my business to use a variety of email solutions, including webmail, Outlook, Thunderbird, most of the stuff you know. It is no joke that Gmail is *head and shoulders* above the rest. Just the facts. It’s much much much faster, for one thing. After using Gmail, when I log into the other stuff I’m practically tearing my face off. And it wins on features, such as group chat (although that didn’t work for me today) and sending emails in the name of other email addresses, forwarding and on and on and on.

Tool #2. Air card. This is a device that you plug into your laptop, that enables you to be connected to the Internet wherever you get cell phone service. Really it's not a device so much as the service you get from your cell provider. Example: AT&T's. Ok, this one definitely does not apply to all entrepreneurs. But I refuse to bump it up or off the list. It is too sweet. Even with the advent of the iPhone, nothing beats actually being able to get on the computer and get on the Internet, basically whereever you are, and be able to be productive. The wifi network gets too slow somewhere or goes down: you switch to your air card. At the airport, you are productive at the terminal, and actually sending emails on the plane before the folks make you unplug. You are driving and get a phone call: there is a problem. You pull over to the side of the road and get online. Welcome to the world of entrepreneur ninjas and commandos. You have numchucks on your belt, submachine gun cartridges strapped across your chest, and an air card in your computer. One caveat: while these tend to offer slow but acceptible broadband in major metropolitan areas, the connection speed in more rural areas is unacceptible and you will be the slowest ninja ever.

Tool #1: The Human Ear. Ok, maybe this is super cheesy. But there is a pattern and a paradox in this list of tools and it all is summarized by my choice for the number one tool: the strangely shaped fleshy listening devices attached to your head. Here’s the pattern: basically every tool I’ve named here is a communication tool. Maybe everything boils down to communication. As a person, you process information; inside your company, you all collaborate; and on the outside, your company engages the world, markets to it, and learns from it. The trick is that all these tools are useless unless you are actually listening and processing. They just facilitate getting great information to your brain, but if your brain is encased in protective stone there is no point. Conversely, an inquisitive, exploratory attitude – that involves speaking with the primary purpose of getting other people to talk – can get you everywhere. Most specifically, to an ever-improving understanding of your customer. I’m always working on this and our recent beer & laptop event was an example that I would like to continue, to the extent that I can afford to buy other people beer instead of myself.

I mentioned a paradox, as well as a pattern. I think the paradox is that entrepreneurship, in distinction with other ways of spending your time professionally, is different most in that you have to be brave and willing to act. All these tools are about listening, learning, and thinking. If these tools had personalities, they would be cautious creatures, probably not entrepreneurs. So in that case, maybe your number one tool is your Fist. Nothing cheesy about a Fist.

And now, some runners-up for the list:

Pidgin – IM is a great communication tool, and Pidgin helps you chat with anyone without spending 20 minutes logging into everything or burdening your computer. Downsides: doesn’t stay connected perfectly, it’s ugly, and no group chat.

Jott – this thing transcribes your phone messages and sends text to you and other people. “note to self” kind of stuff. Makes you feel important. Huge drawback: transcription quality is not quite there.

Twitter – fits in the blog and social network category, and is useful for similar reasons.

Jawbone – you want to be able to have meetings on the phone, even if your changing your baby’s diaper or driving. This is part of why you want to be an entrepreneur, right? Jawbone helps you do that, by cancelling noise and giving you both hands free for unarmed combat. Downside: doesn’t work with my N95.

Firefox – for PC users, using Internet Explorer is like smoking – WHY???? with the distinction that using Explorer doesn’t even make you seem cool. The current version of IE takes about 10 second to load a tab. What exactly is happening during that time? I wonder this, for a good ten seconds, every time I open Internet Exporer or a new tab therein.

Launch will probably happen in next 24 hrs.

2008-02-26T14:41:00.000-08:00

So get our your evangelism hat.
And your Hawaiian shirt.

Beers and the User Experience

2008-02-22T10:13:00.000-08:00

This week we hosted an event where we gave people free beer to bring their laptops and Join the Spank. The objective was to test the user interface and user experience of joining the spank and trying out the site.

We had 6 or 8 people, which was about a perfect number. The event was hugely useful and easily worth the $70 bar tab. There were many comments and little discoveries. Here's a sample of some of the more interesting ones:

Some of the Ajax (fancy technology) was prevented a couple people from joining, so a lower-tech (and faster, actually) process for Joining is coming soon.
Multiple people, once they logged in, ignored the orientation page and went straight to "Start a Spank." Not what I expected but oh so reasonable in retrospect.
After spanking or adding a link people wanted to see their Wall. Once you get used to spanking you don't look much at your own Wall (you know what's there!) but it's of primary interest initially.

All in all, lots of good improvements in the process for our upcoming launch. I shudder to think how many people have tried and failed Joining due to the first part above! Though the positive flip side is that our growth rate should increase.

It also goes to show that this method of learning gives different results from the pipeline of feedback from friends and users (though that pipeline is quite important).

More on the Pitch: Ad Revenue Model

2008-02-16T07:04:00.000-08:00

An interesting conversation during Friday’s pitch was around the business model.

Now, I think if you’re a potential investor in Linkspank and you’re going to choose to focus on any one part of the business to discuss and you choose the revenue model, it’s probably a sign that you are not comfortable with really discussing the business. Because Linkspank is the kind of beast that requires growth in users to make any money at all; and conversely, if you can achieve this growth than you ARE going to be able to make money.

But revenue is still important :-), and like I said I thought it was an interesting conversation. It’s a chance for me to try to clarify my thinking, improve it with your feedback, and also if you don’t know any of this stuff and you’re vaguely in the business than heads up.

I told them that Linkspank had some exotic opportunities for business models, but that we would start simple and turn on contextual advertising once we hit one million users.

“Contextual advertising” (currently limited essentially to text advertising) is advertising that is placed on the page and chosen according to what the page is about, as determined by a scan of the text on the page. You get a Linkspank about the Nicks, and next to it are advertisements for Nicks jerseys, Nicks videos, Nicks tickets.

This kind of advertising makes such a small amount of money that you need to be serving massive traffic for it to get you anywhere, but it has an advantages. First, you can turn it on about as simply as flicking a switch. Google and other services are the ones actually providing the advertisements. There is no need to sell advertisements, find advertisers, any of that crap. This kind of advertising is (basically) what has made MySpace and facebook businesses that rake in lots of cash.

Here’s the model I showed for how linkspank would make its money:

So, when we have 1 million users, we make $33 million in revenue per year. Here’s how the calculation goes: you have so many users, and the view so many pages, and they click on one or more of the ads a certain (very small) percentage of the time, and you make so much money per click, and you add it all up.

They found the number too high and we took it from there. The ads per page is not really disputable – if you’re going to put 6 ads per page than ok then! The CTR (click through rate) per ad is a little more disputable. If your ads look cool like facebook’s, and not ugly like generic AdSense ads, maybe your CTR will increase a little. Or it might for other reasons. But certainly I have seen real world examples where the CTR is at least this low. I think it’s worth considering a case in which the CTR is 0.1%. (That would cut the $30M to $10M).

The page views per day per user is the key number. Well, sort of. The REALLY key number is the top figure, the number of users. As I contend, the key question for this business is the growth. But this second line is key. It currently asserts that on AVERAGE every spanker will view 150 pages per month, which is a lot.

The second line really involves forming an opinion about how growing size will affect the stickiness of the site and user activity. Users are not currently viewing 150 pages per month; they are viewing more like 10 to 17, depending on how you count.

So why would the figure multiply by 10 when the site grows? It wouldn’t necessarily. It depends basically on whether your site actually does something, or people sign up for it and it’s crap. Let’s contrast LinkedIn and facebook (speculatively, not like I have inside numbers). Both are supposed to become richer and more valuable for you the bigger they get, the more potential connections you have and people you can learn about or whatever. Most users will confirm for you the following reality: facebook strongly benefits from having all your friends on there and it makes it much easier to stick around longer. In contast, LinkedIn for most people is a site that they visit occasionally to approve someone’s connection request and then they pop out. Every now and then someone will spruce up their profile. But they don’t seem to be doing much more than they were when the network was younger. I don’t quite think LinkedIn is crap, but hey these are the (anecdotal) facts on this particular issue.

So far all our data indicates that Linkspank will go the way of faceook on this issue and not the way of LinkedIn. The fundamental logic of what spanking is also supports the claim. Will this really bring us up to 5 page views per user per day? I’m not sure that anyone can answer that question definitively. I’m willing to consider a lower forecast. It still shapes up to a very profitable business – IF you get the growth… which once again is the real question.

That really just scrapes the surface of the conversation, but it's enough for Saturday morning. :-)

Results of Pitch at Deloitte Tech Venture Center

2008-02-15T10:03:00.001-08:00

Bananas are the hottest thing, you should invest

I took my hacking, raspy self to Waltham today and pitched at an "investor roundtable" hosted by Deloitte. Launchpad and Atlas were there, and some other folks. DFJ and Spark were supposed to be there but I don't believe they were.

Summary: they conceded that they weren't part of the target market. I also noticed that they weren't too well acquainted with the market space. I am routinely baffled by how little people understand online advertising. Meanwhile, the guy who thought he knew the space suggested (inadvertantly) that I instead build another delicious - which is a deeply troubling suggestion on a variety of levels.

Anyway, to resume the summary: I think they weren't 100% understanding what Linkspank is. And how can you invest in something you don't understand, right? Agreed. They suggested that I go look for a younger angel investor, which I think is a good call. (The investment I'm looking for is $200-500k, depending on timing and other factors, so it's borderline between angel and group of angels or institutional.)

Internet Site = Must Do Demo

The thing I puzzled over most was whether to include a demo in the pitch. It's the Google way of doing things and I was always sold on that. But I was dissuaded from the idea over the last week, by the fact that my practice pitch listeners didn't want to hear the pitch.

In retrospect, I think it's absolutely true - none of these guys want to see a demo. But it's laziness on their part not to want to see one, and it should be my job to force them to see it. Considering investing in a consumer Internet business without seeing the site in action is like considering investing in an ice cream shop without tasting the ice cream. If you wanna do it, go ahead, but seriously.

So, I think in the future I will insist on a demo, even if this means requiring a presentation time of 30 min (without questions). I know that's longer than the norm, but it's fine because I don't want to do business with anyone who won't take a look at the product.

The need for a demo was underscored by the fact that Linkspank's on-paper stats are astonishing, and they still had trouble winning the group over. With no PR, we've grown to 1300+ users. 67% are active in a 2 month period, with 8+ invitations to join the spank sent out per user. The average session on the site in December was 3.7 hours. The business makes sense on paper. There's not more much I could have told them statistically to convince them without having already had a thriving business :-).

Next Steps

The only part of the outcome I disliked was the idea that no one on the East Coast would have the vision to invest in this idea. I was hoping to get outside the box a little by putting Linkspank here instead of there. But (so the story goes), while there are plenty of techie and visionary people here in Cambridge, they aren't angel investors but rather poor kids.

At any rate, next steps are to look a little more globally, and reach out to angel types and get their advice. It will be fun, because I love talking about the business and I'll get some more meaningful interaction with cool people. And I'll insist on the demo :-).

this blog just got way more micro (I'm talking about Twitter)

2008-02-13T07:42:00.000-08:00

I just checked out the Social Media Breakfast. Was cool, thanks Bryan.

The thing was basically a huge Twitter lovefest. It helped me to think a little deeper about the service.

1. Often I want to blog here, but my thought is "too small" for a blog post, or maybe a bit off topic. Reason to try Twitter.

2. Facebook status updates are fun, and I have previously been of the opinion that they killed the need for twitter. But now I'm understanding that the whole game of twitter is VOLUME.

You COULD do a high volume of status updates in facebook, but that's not really quite what it's for and your friends are likely to get bummed. Twitter is designed more to be high volume.

Actually this scenario is similar to Linkspank - you can post a link on facebook, but you can't do it in high VOLUME efficiently (i.e. without spamming your friends). Enter Linkspank, and your world is awesome - more content, bigger brain, bigger laughs.

Anyway, I'm going to try the twitter things for people who for some reason think it's interesting to follow the individual firings of my synapses. That place will be

twitter.com/bitchell

I'll still blog here, of course - when it's more than just a snippet.

You can see that I used my (sort of) real name rather than "linkspank" as my twitter handle. The reason: twitter is not about companies, but rather people. A huge portion of what I do is "Inside Linkspank" type stuff. But there will be & has to be other junk in there too, because when you go high volume the line gets blurry between this & that. Some people raised an eyebrow at the user name "bitchell." I raise an eyebrow back at them. I'm like hey, What do you expect from a person who names a site Linkspank? ;-)