Beginner Business

The FTC has been “up in Google’s grill” with privacy concerns about behavioural advertising ever since Google decided to acquire DoubleClick. Google’s Nicole Wong has been trying hard to defend Google’s online advertising practices.

The bottom line is that right now, everyone’s right. The privacy advocates are right to be concerned when a large company learns too much information about too many people. But in many ways online advertising is going in the right direction, and Google has been at the forefront of this. When so many advertisers thought that the solution to declining ad revenue was more aggressive pop-ups, Google realized that subtle and better-targeted ads, placed where and when people were interested in them, were the real solution.

Lately some advertising providers, including Facebook, have even gone to the point of letting users vote up or down ads. This is leading in a much more positive direction for advertising. (Especially for Facebook, whose advertising targeting is so far particularly bad.)

People complain a lot about advertising, but what we don’t like is annoying, aggressive advertising at the wrong time for the wrong product. We actually appreciate advertising when it’s tasteful and entertaining, and when it’s shown at a time when we can benefit from it. People buy entire magazines mostly for the ads–including fashion and tech gadget mags. Movie trailers are the best example, though–they’re pure advertising, yet many people voluntarily seek out trailers online.

The message: show me ads for stuff I might want! (And get rid of the other crap.)

Back to privacy, though. It’s great that Google, Facebook and so on are finding ways to better match ads to people. That part makes everyone happy. The problem is that they keep that information.

Right now our options are essentially three:

1. See ads all the time, mostly tasteless annoying ones for things you don’t want.
2. Block all of the ads with a browser ad blocker (or selectively once an ad has already annoyed you).
3. Let companies like Google and Facebook take care of finding the right ads for you, and hope they play nice knowing everything about everyone.

If you’re a Twitter user (and it’s the “in” thing to do these days, or so I hear) do you have your latest tweets displayed on your web site?

It’s easy. I prefer the HTML widget because you can play with it a bit more within your own design, etc: http://twitter.com/widgets/html_widget

I’ve made a quick hack to the JavaScript that comes with the widget:

1. No replies - I didn’t want it to display replies to other Twitter users. After all, the people seeing these messages on my site will have no idea who these other users are, or probably even what the strange @ symbol means.
2. Wrap the links - Putting the full URL for the links seemed archaic, so I took the URL for links out of the message, and instead wrapped the whole Tweet in a link, if there was a link in it.

It wasn’t difficult but I thought I’d share the code in case you want to do the same!

function twitterCallback(tweets) {
  var statusHTML = [];
  for (var i=0; i<tweets.length; i++){
    var username = tweets[i].user.screen_name;
        //Skip replies
        if (tweets[i].text.search(/^@/) != -1) {
            continue;
        }
        //If there's a link, remove URL from message and the make whole tweet a link
    var url = tweets[i].text.match(/((https?|s?ftp)\:\/\/[^"\s\<\>]*[^.,;'">\:\s\<\>\)\]\!])/g);
    var status = tweets[i].text.replace(/((https?|s?ftp|ssh)\:\/\/[^"\s\<\>]*[^.,;'">\:\s\<\>\)\]\!])/g, '');
        if (url) {
            status = '<a href="' + url + '">' + status + '</a>'
        }
        //Push the Tweet into the status box
    statusHTML.push('<li><span>'+status+'</span> <a style="font-size:85%" href="http://twitter.com/'+username+'/statuses/'+tweets[i].id+'"><em>'+relative_time(tweets[i].created_at)+'</em></a></li>');
  }
  document.getElementById('twitter_update_list').innerHTML = statusHTML.join('');
}

In order to use it, you can enclose it in script tags like this:

<script type="text/javascript">
--Script Here--
</script>

In my case, I put it in a separate .js file so it can be shared by different pages.

Let me know if it’s of use.

I was reading an old Clay Shirky blog post, A Group Is Its Own Enemy.

It talks about some of the interesting characteristics of groups (in particular online communities), such as how essentially groups need some kind of government, otherwise they’ll spend all of their time talking about “enemies” or sex or how awesome their values/heroes/etc. are, and virtually no time actually pursuing whatever the group was created for. The article was written in 2003 in reference to online communities, but the points are timeless and extend beyond online groups.

It also got me thinking about online social networks and different ideas to build better-quality conversations intrinsically into a network.

For example, you can go with two numbers that seem to come up a lot: 2, 8 and 150.

Two is an obvious number: the best, most intimate conversations happen one-on-one. When you want to get to know someone, you have an intimate dinner, just the two of you. And most online social media reflects this, from Facebook “friends” to text messaging and the way people use email most of the time. The Extreme Programming methology advocated the use of paired programming to take advantage of the power of “dyads.” Two is the ideal number for getting things done.

Eight is the number that In Search of Excellence quotes as being the ideal size of an ad hoc, task force or skunkworks style group–or essentially any productive group.  Five to ten people is a good range–beyond that, you start having to manage people so much that the quality of work and communication drastically decreases. An eight-person group is big enough to combine different skill sets and ideas without getting bogged down. (Interestingly, I’ve noticed that most swing and salsa dance troupes are composed of 5-8 couples, combining both the number 2 and the number 8). Eight is the ideal number for a group project.

Finally, the tribal number: 150. This number has been quoted in numerous places. The Tipping Point refers to it as the “Magic Number” and quotes religious groups, business leaders and evolutionary biologists all coming to the same conclusion: our brains aren’t designed to understand the interactions of groups larger than 150 people. And 150 is bigger than you might think, because it’s not just about remember 150 names and faces (we can handle much more than that). The hard part is keeping track of the relationships between all of those people, from the fact that Johnny likes Lisa but won’t acknowledge it because she’s a Republican, to the differences in how two sub-groups of friends feel about Myspace vs. Facebook.

We see the stress-tests of many social networks right now. Facebook users often have hundreds of “friends” that they barely know, which means being inundated with party invitations from halfway around the world and annoying “which of your friends is the hottest pirate?” applications. Many Twitter users “follow” vastly more people than they can actually read, which means that the conversational nature of Twitter disappears (something that Twitter clients all try to fix).

The problem? When our social networks spiral into uncontrollable hugeness, the whole two-way interactivity of social media is stifled, and in time the network itself will die if the technology doesn’t adapt to fix it. Facebook has been trying to tweak its interface to reflect this need for users to see exactly enough information to keep them interacting with their friends, but not so much that the site is useless.

One of the keys to social groups is that they need structure. Ad hoc groups aren’t really unstructured, they’re just free to evolve a new structure that fits their needs. All groups either evolve structure or die, and the best social media networks are the ones that evolved the best structures for interactions.

Why not take the three magic numbers and put them to good use?

Two (1:1) - Actually Facebook does a great job of this. You have 1:1 friendships, Facebook messages (which don’t have to be 1:1 but usually are), and even the Wall-to-Wall feature that helps to isolate two sets of broadcasted messages into one conversation. Brilliant.

Eight - This is the first number that is under-exploited. What about a social network where certain types of groups were limited to just 8 people? It seems like an annoying restriction, but then look at Twitter’s success in limiting posts to 140 chars.

150 - Here’s a radical thought: what if you were limited to a maximum of 150 “friends” in your social network? Or what if certain groups or networks were limited to 150 people?

We love to hate restrictions, but from Haiku to Delta blues, sometimes there’s great beauty in simplicity.

According to Businessweek, bailout money would be better spent on startups.

From 1980 to 2008, startups, defined in this case as companies less than five years old, accounted for all net job growth in the U.S., according to the Kauffman Foundation’s Business Dynamics Statistics[.... The] average annual net employment growth rate for startups was about 3% a year while the growth of the rest of the U.S. private sector for the same period was about 1.8%.

The message here is clear: big business loses jobs, and small businesses make them again. As someone who’s started a few companies that are still increasing employment, I’m proud of the role that entrepreneurs have in making jobs. Still, two things bother me:

• Doesn’t anyone remember the Dot Com era? That whole bubble was built on startups. Sure, they employed a lot of people, but how long did that last? Do we really need to give startups even more money?
• How much of the employment gains from startups are simply at the expense of bigger businesses? It would be great to get some figures on that.

Funding startups to fight the recession and increase employment could be a stroke of brilliance if the kick-start follows these rules:

1. Loans are better than grants. Obviously as an entrepreneur, I’d rather receive a grant than a loan. (Free money, anyone?) But the way companies are funded in North America is too much about VC money, which is about spraying money around and seeing what sprouts up quickly. It favours short-term payoffs. Long term loans are more likely to build solid companies.
2. Focus on the long term. The whole point is to have a permanent effect on the economy, not stimulate yet another bubble. The solution isn’t to fund a hundred “could be the next thing” companies. It’s to support companies that are likely to be around in five years.
3. Don’t focus just on tech companies. Sure, high tech is sexy. And it’s important to stimulate that kind of growth. But tech companies–hardware, software, biotech–are where the VC money is already going. And not everyone in the US is ever going to become an engineer, so we need to create more jobs outside of tech. Peter Lynch has said that the best bets are companies that use technology, not the ones that make it, because the margins on any given technology consistently decrease.
4. Do fund resources for entrepreneurs. Successful entrepreneurs tend to be experienced in their field but not experienced running businesses. They are also likely to already have families, which makes them sensitive to needs like health care. Resources such as business education and subsidized health benefits could go a long way towards encouraging the creation and growth of new businesses.

Thanks to Guy Kawasaki for Tweeting the Businessweek article.

Thinking of life as a game makes it more fun. Some of the most interesting (and successful) people I know think of life as though there were points to be won or lost for the sheer entertainment of playing. And game theory, the study of how logic and probability influence outcomes in games, has some good advice for everything from getting a good deal on a car to handling terrorists in a hostage crisis.

But if life is a game, it’s not really the kind game theorists look it. It’s less like chess and more like… Calvinball–and entrepreneurs need to keep this in mind. There’s a very insightful conversation described in The Black Swan that I enjoyed reading, between the author Nassim Nicholas Taleb (”NNT”), a successful businessman from the Bronx named “Fat Tony,” and “Dr. John,” an engineer working as an actuary in an insurance company:

NNT: Assume that a coin is fair, i.e., has an equal probability of coming up heads or tails when flipped. I flip it ninety-nine times and get heads each time. What are the odds of my getting tails on my next throw?

Dr. John: Trivial question. One half, of course, since you are assuming 50 percent odds for each and independence between draws.

NNT: What do you say, Tony?

Fat Tony: I’d say no more than 1 percent, of course.

NNT: Why so? I gave you the initial assumption of a fair coin, meaning that it was 50 percent either way.

Fat Tony: You are either full of crap or a pure sucker to buy that “50 pehcent” business. The coin gotta be loaded. It can’t be a fair game.

NNT: But Dr. John said 50 percent.

Fat Tony: (whispering in NNT’s ear): I know these guys with the nerd examples from the bank days. They think way too slow. And they are too commoditized. You can take them for a ride.

You can simply call it “street smarts” or “thinking outside the box” but that’s the kind of big-picture thinking that seems to help people in business–and in the game of life, the game without rules.

Back when I was in university, a friend of mine–to protect his name I’ll call him “Naaron Drigglenslaw“–and I were interested in expanding the scope of our interactions with the computer network of our alma mater. He ended up succeeding in bypassing the login screen merely by pressing Control-Break, a key combo that in DOS was originally used to end programs. I was frustratingly jealous because it never occurred to me that any self-respecting programmer would make a SECURITY screen vulnerable to a interrupt like that. It’s kind of like building a steel padlock that requires two keys and a combination, but also spontaneously opens with insistent shaking.

But Naaron didn’t make the assumption that the login screen was built intelligently. Looking back on my software development days, his was the smart guess. He now runs a great Interweb company which I’ll call the “Miracle Factory,” not to be confused with “Miracle Whip” which is a nutritional supplement for university students. Naaron’s company produces cool things like Ask500People.com.

Curiously, they don’t make any security software.

There’s a Zen story that taught me a lot about the nature of giving and receiving:

While Seisetsu was the master of Engaku in Kamakura he required larger quarters, since those in which he was teaching were overcorwded. Umezu Seibei, a merchant of Edo, decided to donate five hundred pieces of gold called ryo toward the construction of a more commodious school. This money he brought to the teacher.

Seisetus said: “All right. I will take it.”

Umezu gave Seisetsu the sack of gold, but he was dissatisfied with the attitude of the teacher. One might live a whole year on three ryo, and the merchant had not even been thanked for five hundred.

“In that sack are five hundred ryo,” hinted Umezu.
“You told me that before,” replied Seisetsu.
“Even if I am a wealthy merchant, five hundred ryo is a lot of money,” said Umezu.
“Do you want me to thank you for it?” asked Seisetsu.
“You ought to,” replied Umezu.
“Why should I?” inquired Seisetsu. “The giver should be thankful. (From Zen Flesh, Zen Bones which you can read here.)

A valid point made in this article is that it’s deceptive for Web application to masquerade as something it’s not–ie. a native application–because it violates the instincts that the users have acquired based on context.

When I use my Ubuntu computer, my brain goes into Ubuntu context. When I switch to my MacBook, there’s a conscious change of context: I start using Apple’s Command Key combinations, for example. That’s why I look for MacOS apps that feel like MacOS programs. It’s not hard to change context; it’s hard when the  behaviour doesn’t fit the context.

What I like about Gmail is that it uses some of the same ideas from applications like Outlook, but the interface is strongly based on the context of the web browser. That means that there are a lot of things Google added that made sense for someone using web mail–such as the Webclips or Google Talk built-in; and also that they avoided trying to do the drag-and-drop things that didn’t make the same intuitive sense.

Still, web developers aren’t as limited as they were before, and as MacOS, Windows and Unix have stolen relentlessly from each other, we should expect Web Apps to copy from the offline app world. The main thing is not to falsely imply via the interface that the web interface reproduces a native interface more faithfully than it does. The Uncanny Valley effect isn’t just visual: it’s most frustrating when the visual metaphor breaks down.

An important concept in design is affordances: the obvious characteristics we can intuit about an object from its design, just by looking at it or even feeling it. A door knob affords a turning and pulling motion, whereas a flat plate suggests pushing. When you’re used to certain appearance (blue underlined text) in a certain context (web pages) affords a certain action (eg. clicking sends you to the linked page), it becomes a matter of instinct.

In Windows, you learn that certain objects can be right-clicked, and certain actions can be undone. So if your interface looks like a Windows app, then users will be disappointed when they can’t do those things. Not to mention that MacOS users may not have the same expectations.

The solution isn’t to avoid adding new features: it’s to keep the interface consistent, and to keep in mind the context of the web. A great example is the original PalmPilot. Rather than trying to make a tiny, feature-poor knock-off of an existing desktop operating system, PalmOS created a whole new way of relating to small devices. Rather than disappointing users by implying expectations that couldn’t be met, they created a new context. Similarly, the iPhone uses a specialized interface that’s different from the desktop interface, not just in behaviour but also in look.

Bottom line? Here are my guidelines for web app design without Uncanny Valleys:

1. Do include features like drag ‘n drop, cut ‘n paste, right-click context menus, etc.
2. Don’t make your user interface look too much like a Windows or Mac application.
3. Do copy some of the common design features of modern apps, like a File/Edit menu where appropriate.
4. Don’t forget it’s a web app, and don’t try to convince the user that it’s not.
5. Do embrace the advantages of being a web application, such as links, working back buttons, mashed-up web content, etc.

My favourite work tool is a notebook and a pen.  (Lately it’s a DeSerres notebook, which is kind of like the Moleskines but a more convenient format, and a Uni-Ball JetStream pen, which is like a gel but without the smudging.)  Lately I’ve taken to slapping photos on them, partly so I can tell my various black notebooks apart, and partly because I think it’s cool.  My last inspirational image was “Epic Failure,” which is a personal entrepreneurial goal.  This latest one inspired me from the 100 Photographs that Changed the World:

Recently our business has been experimenting with using Google Docs, and we’ve been having some limited success. I’ve noticed there are a lot of articles on the web about Google Docs, and they all seem to either praise the system as a Microsoft Office killer, or imply it’s just a kindergarten toy. So far it seems to be neither. Here’s why.

First - What is it?

If you’re recently emerged from a long sub-rock siesta, maybe you still haven’t heard of Google Docs, Google’s new online suite of office web applications. If you use other Google services such as GMail, then you already have an account, and in fact when you receive an MS Word or Excel document through GMail, you have the option of opening it as a Google Document.

The idea?

• Instead of firing up MS Office every time someone emails you a spreadsheet or Word document, you can open the document directly from GMail.
• Where did you leave that document? At home? In the laptop? At work? Instead, just store them online and access them from anywhere.

The Good

The first time I used MS Office for collaborative work, I was co-writing a book (Slackware Linux 4 Unleashed). The revision process involved me sending a new chapter to the editors, receiving their revision comments, and sending back my revision. Sometimes we had several layers of revisions contained in the same document. It was a lot better than the old marker-on-the-printout method, but still slow.

Google Docs is a big step up from that. As with other online collaborative systems, several people can update a document simultaneously, in real time.

Recently at Swing Dynamite we used Google Docs to collaborate on making a schedule for an event, and sharing registration and financial details about the event. Here are some of the things I loved about doing it this way:

• Chat. The Google Talk chat system is built-in, and as soon as you’ve invited someone to collaborate on a document, they’re available in a chat window when they’re editing the document. When we were working on our event schedule, this was very useful, and it saved a lot of time. Instead of getting together physically to meet, we saved time by doing all the revisions and discussions online. In total we took about 30 minutes instead of several hours.
• See changes in real time. You can actually see the other person make changes as they happen. This is handy–you can easily respond in the chat window and discuss what they’re doing: “are you sure those numbers are correct?” This was useful for building our event schedule, and also for going over some of the numbers.
• Permanently share. What I mean here is that, instead of having to email your colleagues every time you make a revision, they always have access to the most recent version.
• Customizable notifications. In my case, I wanted to know when any update was made, so I had the documents set to notify me by email whenever there was a change. However, if I was only interested in looking over the final version, I could have turned notifications off. What’s nice is that unlike email collaboration, where typically you get emailed every time a collaborator deems appropriate, you choose how often you get pinged.
• Surprise: Spreadsheet formulas work. That was my initial fear: that the formulas wouldn’t work, rendering spreadsheets basically useless. But in the simple spreadsheets we were collaborating on, the formulas and even formatting worked perfectly.
• Soon: Even work offline. Google is also slowly rolling out an offline capability, enabling you to use Google Docs even without an internet connection.

The Bad

The system still has a lot of limitations, however. Here’s where we hit a wall:

• Word processing is very limited. More to the point, usually when we use a word processor, we’re not just writing a strictly text document–if we were, we’d probably just send an email. Usually there’s a lot of formatting involved. When I tried collaborating on a staff handbook, I found that the version I uploaded ended up looking nothing like the original when I viewed it as a Google Doc. All the text was there–but none of the formatting. So if you’re collaborating on a Word document, I suggest using Docs in the early stages of collaboration, as you work on the text itself. Afterwards, import it back into Word and finish it off with style.
• Spreadsheets: Keep it simple. I found Docs to be much more useful for spreadsheets. I didn’t encounter major issues with formatting or formulas, although I’d advise not trying to work with spreadsheets that contain complex formulas. The big difficulty, though, was in the limited functionality. For example, you can sort a column–but only the entire column. You can’t just sort an area without affecting the rest of the sheet. So to collaborate you’d want to make the spreadsheets fairly simple, or realize that you need to do more complex updates offline and then upload them. It’s a little annoying, but then it’s really just a return to the old email revision process.
• Lossy Saving. That’s lossy as in loss of information: remember that if you upload a document that’s too complex for Google Docs, you lose all of the extra formatting. So you can collaborate and make changes, but even when you download the revised file, you’ll have to re-format it.

Is it useful?

The proof is in the pudding: I’ve started to use Google Docs more frequently after my recent experiments were a success. The key is that I wouldn’t work on a document for public release through this method… yet. However, as a method for sharing information between members of a project, Google Docs is a very useful tool, especially if your collaborators already use GMail. I’d especially recommend it for internal documents, not for collaborating on something your clients will see unless you switch to something more sophisticated in the final stages.

Where are they going with this?

Is it going to last? Between the enthusiasts crying “MS Office Killer” and the pundits claiming Google Docs is too limited… they’re both right.

The one thing we know about technology is that it improves. Today Google Docs is a useful collaborative tool, but in no way sophisticated enough to replace MS Office. In any case, there’s already a major alternative to MS Office, and completely free: OpenOffice. And yet MS Office still thrives. There’s no reason to think that Google Docs will kill MS Office tomorrow.

However, looking to the future, the entire reason OpenOffice exists as a completely free Office suite is that to a large degree, the Office application space is stagnant. Basically spreadsheets and word processing documents do what we need them to. Little vertical improvements aren’t really enough to charge money for. In fact, it really doesn’t make sense to me that anyone whole pay for MS Word anymore, when OpenOffice is available. So the lateral leap that Google has taken with Docs is essential. For now, Docs is just a limited (but very useful) online collaboration tool - not full-fledged Office suite. But as the technology improves, Docs may set the standard. Still, MS Office has a major asset if it can leverage the combination of its existing MS Office and .NET technologies combined with the Hotmail/Live system, behind their new Office Live Workspace edition.The question will be: who can do it the right way? So far Google’s been winning on that point.

In the meantime, my advice is to download OpenOffice and start using Google Docs for online collaboration.

A rebuttal to the Tipping Point brings up interesting points, but seems to miss some important points.

Malcom Gladwell’s famous book The Tipping Point put forward the idea that small numbers of people have unusual influence on the spread of ideas and even disease.  However, recent work by researcher Duncan Watts, described in an article in Fast Company (Feb 2008) suggests that these “Influentials” don’t really have as much influence as previously thought.  In fact, anyone can become a major transmitter of an idea.

While the FC article brings up some important counter-arguments to the Tipping Point suggestion that viral effects depend on a small percentage of individuals, it only partly covers the importance of Stickiness.  In the Tipping Point, Gladwell explains that the “Law of the Few” isn’t enough to make a new product or idea popular: it first has to already be “sticky,” meaning that it’s the kind of thing that people are highly inclined to remember and share with others.  However, recent work by researcher Duncan Watts suggests that

This comes up briefly in the FC article: “Watt’s theory says the emergence of a trend depends not on Influentials, but on the susceptibility [emphasis added] of the public to the ‘virus.’

That’s basically what Stickiness is.  If the public is open to accepting and re-transmitting an idea, then anyone who sees it will be more likely to share with others.  That depends a lot on how memorable the idea or product is, and the context (another Gladwell “law”).

The major contribution of Watt’s research seems to be that there’s a lot more randomness going on than the Tipping Point would have you believe.  Sometimes great ideas get ignored, and sometimes dumb ideas get spread through dumb luck.