Tag Archives: marketing

Dropbox and Xobni at Web 2.0 Expo

05 Wednesday May 2010

Posted by in Analytics, Technology, Web 2.0 Expo

≈ 1 Comment

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In the first session I attended on Day 2 of Web 2.0 Expo 2010, Dropbox and Xobni shared their stories and lessons from launch.  It was a really good presentation (Adam Smith from Xobni posted the slides on his blog post, linked above).

A lot of the advice is stuff we’ve all heard before: make sure you have a great product, test a lot, get user feedback, create scarcity to build buzz, be responsive and bold, focus on doing the critical few really, really well.  Even if that advice has been beaten to death, I still find startup success stories inspiring.

One thing that caught my attention was an almost throw-away statement that Adam (I think it was him) made at the end.  He said that users they acquired through PPC didn’t convert to paying at a very high rate, but they tended to refer a lot of customers who did.  He also mentioned that Zynga measures referrals through Facebook as well.  The interesting thing is not that the referrals happen, but that they measure it and account for it in the ROI analysis of their marketing campaigns.

I might be reading into his really brief comment, but if it’s true, that’s definitely an area where I could learn a lot more.

At Homestead and mostly at Intuit, we only do the first level accounting in measuring the ROI of campaigns. That is, we count the number of users who are directly attributable to the campaign.  It’s definitely easier measuring users by their propensity to sign up/purchase than measuring users by their propensity to refer others.  All referred sign ups are really just considered gravy. This first level of ROI accounting has been really successful for us as it still continues to scale.  But the question remains: are we leaving money on the table?

There are a lot of questions in the details of how you’d go about doing this “second level accounting”:

  • What are the best ways to track a second level user back to the referring user and then back to the originating lead gen source?
  • Assuming we would track using links of some sort, should we try to account for “offline” referrals (using untracked links)?
  • What is a reasonable time frame to count the referrals from a first level user?
  • Does a first level user get any credit for third level signups?
  • Do you account for the speed of the referral?  For instance, you could credit the first level user with all $ collected from the second level user within 12 months of the first level user’s signup, thus rewarding those who refer faster.

I’m sure there’s more.

If we can figure this out with any reasonable amount of accuracy, this could significantly change the economics of how we do acquisition marketing right now.

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The Commoditization of Technology

24 Wednesday Mar 2010

Posted by in Software Development, Startups, Technology, Uncategorized

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I’m a software engineer by training, somewhat by practice, and, in a sadly diminishing way, by mindset.  Maybe some of the real engineers around me can back me up on some of that. (Please?)

So it is with a heavy heart that I say that software technology has become a commodity.  Evidence is everywhere:

  • Increasingly, technical work is contracted out to third-party developers, sometimes offshore.  “Here’s a spec; how cheaply can you build it?”
  • Platforms are getting faster every day.  You can stand up a Rails site now orders of magnitude faster than what you could do just a few years ago.  Hell, you can configure a WordPress site to do almost anything you want orders of magnitude faster than a Rails site, for free.  Why stop there?  You can pick-and-click your way to a Ning site orders of magnitude faster than configuring a WordPress site.  (I know all those technologies/platforms don’t serve the same need, but you get the idea.)
  • Software technologist supply is increasing; i.e., there are more software developers now than ever.  The ease of building things is dropping the bar so low that a 17-year old kid can build Chatroulette in a few days.  Culture and technology is changing so that everyone can be, and is becoming, a technologist.
  • Costs of apps are dropping.  Mobile apps cost $0.99, not per use, not monthly, but once ever.  That’s because it takes a 17-year old a few days to build it.  If you make $500 on your app, you’re ecstatic.

There’s nothing terribly radical about this observation; I’m sure it’s out there everywhere.  It is very interesting to me, though, to take it to its logical conclusion.

Imagine if technology becomes so easy, so ubiquitous, so accessible that if you can imagine it, you can build it (or have it built) for nearly free.  I think we would all agree that that’s where we’re headed, amazingly quickly.  How would the software/internet industry change?

My take (thanks for asking) is you end up with something like the mass-market clothing industry (forget haute couture for this comparison).

Stick with me for a bit. Now, I won’t pretend to really know the clothing industry, but my naïve view is that it’s driven by designers and marketers.  The “builders” are outsourced to the cheapest suppliers possible such that if a designer can imagine it, they could have 20,000 units drop shipped to their warehouse in a week.  The success of a designer or a retailer or a brand is never about whether it can be built, or how efficiently it can be built, or how cheaply can it be built, but is only about whether enough people will buy it.

You can already say the exact same thing about the software industry, and I run into this all the time at Intuit.  An engineer or architect will have or hear about an idea and jump straight to the standard question: how are we going to build it?  They start thinking about data models, class structures, engineering processes, etc., stuff that I personally love arguing about.

But whenever I’m in these conversations I ask the same questions: what is the big unknown about whether or not this will be a successful idea? “Can it be built?” or “How efficiently can it be built?” is almost never the issue.  Put another way: if you ask the engineer/architect if they think it can be built, their answer is always “Of course”; if you ask them if people will actually use it/pay for it, the answer is typically “I don’t know”.  Voila, your big unknown.

I’ve rambled on for long enough, but I’d love to know what people think.  I actually have many, many more thoughts of what the software/internet world would be like with free technology, but strangely, they all have one common theme: we’re here already.