If You’re Not Failing Regularly, You’re Not Trying Hard Enough

I love great quotes. I’ve been reading the fantastic & inspiring book, Founders at Work by Jessica Livingston.

The book is basically a collection of interviews. In it, Livingston speaks with the founders or founding members of companies like Flickr, del.icio.us, PayPal, Hotmail, Blogger, Bloglines, Craigslist, Firefox, Six Apart, 37Signals, Hot Or Not, TiVo, WebTV, Adobe, Apple, Lotus, Groove Networks, Fog Creek Software, Lycos, Yahoo, and more. Quite a list, huh? Yea, I know.

I’m currently reading the interview with Stephen Kaufer of TripAdvisor. One line Kaufer said really struck me:

If we’re not failing at something on a regular basis, we’re just not trying hard enough.

He’s not saying you should be coming up with failures all the time. He’s saying you shouldn’t be afraid of failure. Let go of the fear. Be bold and try something crazy.

On the Web, you’ll soon know if a crazy idea is good or bad. It’s relatively easy to quickly deploy a new feature, get feedback, then pull it if it sucks. But if you hold back the idea because you’re afraid of, I don’t know, whatever, then you may have just held back a revolutionary idea.

Fortunately, companies like Blogger, del.icio.us, and Flickr didn’t do that. If they did, think of what they would have missed. What we would have missed.

Relying Solely on AdWords as a Business Model

How would you like to make $115,000 a month? I sure would. That’s how much Sourcetool.com was making off of Google AdSense ads.

And that, apparently, caught the eye – and ire – of Google (GOOG).

Joe Nocera of the NY Times wrote about Sourcetool.com’s dilemma last Friday in his article, “Stuck in Google’s Doghouse“. In short, Sourcetool.com was making $653,000/month in revenue by spending $500,000/month on Google AdWords. That means bidding on sponsored search keywords for about $0.05 – $0.06 a pop to bring traffic to their site, then getting around $0.10 each time someone clicked on an ad. Though Sourcetool.com is adamant that what they’re doing isn’t ad arbitrage, their business model essentially is.

Then Google made some changes to their AdWords algorithm, resulting in an increase of Sourcetool.com’s minimum bid requirements to $1, and in some cases: $5 or $10. The reason given was that Sourcetool.com’s landing pages were not high-enough in quality – they weren’t sufficiently “googly”, in Google-speak. Even after numerous phone calls, rebuttals, and changes to their landing pages, the minimum bid requirement remained. Google’s stance is that their algorithm has spoken. Sourcetool.com’s stance is that something unfair is going on, since Google has made exceptions to others before, including to one of Sourcetool.com’s competitors.

Whatever the case, this basically killed Sourcetool.com’s business model.

One Customer Source, One Revenue Source

Let’s put aside our feelings of ad arbitrage and Google’s practices for a moment here. There are already lots of opinions in the blogosphere, from debating whether or not Google is a monopoly to potential dishonesty within Google’s algorithm to Google doing what’s best for their customers.

Let’s instead talk about Sourcetool.com. Here’s a business that had figured out a way to generate nearly $1.4M a year with a single web property. Not bad!

However, 100% of that revenue was dependent on one source – Google. (Or, more specifically, Google AdWords to bring in traffic, Google AdSense to monetize that traffic.) There’s a strong inherent risk in that. They are at the mercy of one source, and should that source change its policies, go under, or simply turn its back on them, then they’re screwed. And that’s exactly what happened. They got screwed.

To be fair, there are lots of small businesses that rely on one source for their customers and revenue, be it a single product or service, or a single online marketplace like Amazon (AMZN) or Ebay (EBAY).

You know the cliche “don’t put all your eggs in one basket?” When that basket breaks, you’ve lost all your eggs. That’s what will happen if you have only one customer or revenue source. When it breaks, you’ve lost all your customers and all your revenue.

Product Diversification

Although it’s not as relevant to Sourcetool.com, I’m going to touch on product diversification first. In today’s economy, product-line diversification is essential for business stability – just as portfolio diversity is essential for investment stability. Even large corporations realize this. The Walt Disney Company (DIS) is famous for diversifying from cartoons to movies to amusement parks. Apple (AAPL) went from personal computers to mp3 players to mobile phones. And Starbucks (SBUX) sells everything from espressos to board games to CDs.

Which, of course, begs the question – can there be too much diversification? Yes, if it goes beyond your core competencies and brand. But that’s another discussion.

Channel Diversification

Now let’s touch on marketplace or channel diversification. You can look at Google as a kind of distribution channel for Sourcetool.com – it was the primary way for them to acquire customers. No Google, no customers. That’s a pretty simple and scary formula.

The reality of the situation is that Google directs the majority of web traffic nowadays, so most any web-related business needs to work with Google to some extent. But fortunately, there are alternatives.

According to the article, Sourcetool.com was only using Google AdWords to generate traffic. I’m sure that wasn’t the only method, but for the sake of this discussion, let’s assume it was. Here are some other methods:

Using the direct URL method means massively branding your URL so your customers know it and can type it into a web browser manually. It’s probably the most costly method, but lots of start-ups with strong brand recognition do this – such as Flickr.com, YouTube.com, and PayPal.com. Same goes for large corporations like Pepsi.com, BankOfAmerica.com, and NYTimes.com. (Sure makes having a .com domain name pretty important, huh?)

It’s certainly not easy to diversify your online channels, but relying on one 100% can be disastrous. Say you relied on Google for 80% of your traffic, Yahoo for 15% and MSN for 5%. You’d still have 20% of your traffic if your relationship with Google changed. That’s better than 0%, right?

And as a bonus, for ecommerce retailers out there, Amazon and Ebay aren’t your only channels. The list above also applies to you, as well as these online shopping comparison engines & marketplaces:

Revenue Diversification

Now let’s touch upon revenue diversification. Sourcetool.com’s only source of revenue is Google AdSense. Though their current problem is more about customer acquisition via a single channel, it wouldn’t hurt to diversify their revenue streams too, especially if Google were to kick them out of AdSense.

Fortunately for business owners, AdSense isn’t the only ad network in town. There are dozens of others, though none seem to do content matching as well as AdSense right now. Since I’ve listed a bunch of them in my entry about blogging for cash, I won’t repeat them here.

There are also affiliate programs, which work like sales commissions. If you help a retailer sell an item, they’ll pay you a percentage of the sale. Some savvy affiliate marketers are able to make six-figure checks doing this. You’ll also find a number of affiliate programs on my list.

Along with the ads model are sponsorships. Sourcetool.com could try to get sponsorships from various retailers to earn extra income. That would change the nature of their directory though, as they tout themselves as a free directory right now.

There’s also the subscription model, though I’m not sure what kind of premium content Sourcetool.com could offer.

In Conclusion

Relying on a single source of customers or income from a single product or service is an inherently dangerous business model. If that source goes away, so does your business. To solve that, you need to diversify.

If you’re relying solely on Google AdWords for traffic, consider diversifying. Try Yahoo. Try MSN. Try social media marketing. Diversify your customer acquisition methods.

Same goes for your revenue sources. If Google AdSense is your only income generator, consider diversifying. Try another ad network. Try an affiliate program. Try subscription models. Diversify your revenue sources.

Good luck! And remember – diversify diversify diversify!

The Advertiser/Customer Break Up

Now for some Friday fun. What happens when advertisers and customers start getting intimate? Miscommunication. Trouble. And eventually, a break up.

Here’s an oldie, but a goodie:

This video was created by Geert Desager, a Trade Marketing Manager South East Asia for Microsoft (wow, that title is a mouthful), and the Belgium-based ad agency Openhere. They also created a companion blog called Bring the love back. This was all part of a marketing campaign from Microsoft Digital Advertising Solutions to promote their search engine advertising products.

It has since been followed up by a second movie, which stars the Advertiser, CEO, and Creative Director (with the last “R” turned backwards for extra irreverence), and a companion blog called Get Inspired Here. Unfortunately, I didn’t find the second movie as, uh, inspiring. The first one was hilarious. A great play on a couple’s break up. The second one, eh. What was it a play on? A corporate meeting with executives and marketing personnel? That’s just not as funny.

I think they’re working on a third one right now. Hopefully it’ll be better. Good luck guys!

Biz Idea: Portable Digital Advertising

Here’s a random idea I once had. You know those ads you see plastered inside of restaurant & bar bathrooms? They’re usually behind a plate of glass and right at eye-level.

Advertisers pay to get that “captive” audience. (When you’re, uh, lightening your load, you’re a captive to anything you see right in front of you.) And restaurants & bars get additional income from those adverts.

Those are the ads I’m talking about. Some companies have even gone a step further – some have installed flat-panel screens to show video ads. Now you can watch the latest Batman trailer while emptying your bladder for more beer. Not a bad idea, if they could be installed on bathroom stall doors, though that might encourage people to take longer than necessary.

Now here comes my idea. Drum roll, please. Budda budda budda budda…

Idea Summary

What if you operated a business-to-business company that offered portable flat-panel screens for digital & video advertising? They could be as small as a regular laptop screen. Your customers would be any kind of business that has customers that have to wait – like busy restaurants, dentist & doctor offices, oil changing services, etc. These screens could be placed in their waiting rooms, so their customers could have some eye candy, instead of tapping their toes and staring at the ceiling mindlessly. Impatient customers may even enjoy the visual distraction. And while some customers may prefer reading a magazine, some may prefer a bunch of movie trailers or entertaining commercials.

Business Model

Your revenue would come from the advertisers. You’d be able to give them specific geographic targeting, as well as some demographic targeting (the customers who go to a Jiffy Lube in East Palo Alto, CA, will be different from the customers who go to a plastic surgeon in New York City, NY, for instance).

Target Market

Your customers would get paid for hosting these portable flat-panel advertising screens at their locations. This additional income would make this device more attractive than a bunch of waiting room magazines too. A dentist would have to purchase a bunch of magazine subscriptions. But hosting one of these screens would mean extra cash for the dentist. Sound-sensitive environments such as restaurants could turn the volume down (or mute it) while others may want the audio component as well.

Product

The device would just be a flat-panel screen connected to a computer of some kind. If a dummy terminal could be built simply to receive & render web pages & video, that would be even better. The ads could be anything from video to static images to animation. To get the ads, the device would need to be connected to the Internet for real-time transmissions. A dedicated line would be more reliable than a wifi connection. This unfortunately means the customer would need to have Internet access. Not all customers will. Alternatives? I’m not entirely sure yet, but I’m sure some smart person could figure something out (maybe you pay for a cheap dedicated line, maybe you partner with an Internet provider, maybe you build it to receive radio transmissions, I dunno).

Sales

Other than device costs, you’d also need to hire a staff of salespeople who’d sell it to local businesses. Signing up franchises and national chains would be great, but some customer types wouldn’t exist in such forms – such as dentists & doctors. There would also be some sunken costs as you attract advertisers and customers from the onset, both of whom need to see a threshold number of the other before committing. Or, perhaps, you eat some of the initial costs and pay customers to host your device while running generic ads until you gain enough traction in the market.

Competitors

There are a fair number of indirect competitors right now who are offering video screens to businesses, though they generally target bathroom placements. This device could be placed anywhere: bathroom, waiting room, lobby, anywhere. These competitors already have a device, advertisers, and advertising network, however. To make the leap to placing their device anywhere may not be that difficult. Could this idea be more suited for one of them then, as opposed to a brand new company? Maybe. Or, since they’ve been targeting seedy bar bathrooms for so long, are they unable to reach more discreet customers like dentists & doctors? That could be the niche opportunity this business needs.

Conclusion

I do see some legs to this idea, though I’d hate to introduce even more intrusive advertising into this world. Though, to be honest, it would be kinda cool to watch movie trailers while perched upon the porcelain throne of quiet contemplation… Hmmm…

And who likes waiting around and flipping through old copies of Highlights while waiting for their dentist to finish up on a bunch of screaming patients? I’d rather be entertained by a new Apple or Infiniti commercial or something. Wouldn’t you?

Yahoo! Mash is Shutting Down

Oh well, had to happen sooner or later. Yahoo!’s (YHOO) second experiment with social networking, Yahoo! Mash, is officially shutting down on September 29, 2008.

The first experiment, Yahoo! 360, has already shut down. Sort of. It still exists at its URL. But Yahoo isn’t actively developing it anymore and is quietly transitioning it to “a more integrated Yahoo! ‘profile’ experience.”

I know the developers on both projects. Even managed some of them once. It’s kind of sad to see this happen. Not surprising at all, just a little sad, because I know how much hard work these developers (and the entire teams) put into these projects.

Unfortunately, the market just didn’t take to them. Both arrived late onto the social networking scene. Both didn’t do everything the market wanted, and did too much of the things the market didn’t want. And both carried the Yahoo brand, which was good and bad. Good in that thousands of Yahoo fans jumped on and loved its fledgling integration with the rest of the Yahoo network. Bad in that Yahoo didn’t seem as cool to the MySpace (NWS) and Facebook crowds.

It was great that the management team green lighted these two products originally. Too bad they didn’t green light them sooner or give them more resources to make better products. Both had big dreams. Seeing their full visions materialize would have been pretty cool. But alas, they were not to be.

Rest in Peace, Yahoo! Mash – and Yahoo! 360. You were interesting experiments. I hope somebody learned something from them.

Should I Switch to Gmail?

I’m struggling with a question. Should I switch to Gmail?

I’ve been using Yahoo! Mail for five years or so. Like many of you, I’ve invested a lot into that email address. Switching from an older account that was deluged by spam, friends found it painful to keep track of which email address was my active one. Many kept sending messages to the old account. Others always prefaced their emails with, “Which email address do you check? xxx or yyy?”, even after I’ve given them an answer like ten hundred thousand times. Ugh!

I’m also a power user of Yahoo!’s (YHOO) personal information management tools, such as Yahoo! Address Book and Yahoo! Calendar. They provide me with a way to carry my contact list and schedule anywhere I go, even if my mobile phone dies on me. Both are also tightly integrated with Yahoo! Mail. So switching from Yahoo! Mail isn’t just a matter of adopting Gmail, I’d also have to adopt Google’s (GOOG) Contact list (embedded within Gmail) and Google Calendar.

Quite a few hurdles. Is the switch worth it? Well, Google’s products are, admittedly, pretty damn cool. I’ve been using Google Docs, Google Reader, and other products fairly extensively. As they integrate them all into a tighter suite, their collective benefit increases for me. So what’s stopping me from switching? Let’s address each issue and see if any solutions exist.

Issue #1: Reminding Friends of My New Email Address

Sending a mass email to my friends is easy enough. Reminding those few friends who forget that I have a new email address is tougher. How can I make sure all of those dumb-dumb heads start using my new email address?

Potential Solution? Yup!

Yes, an easy solution exists! After emailing everyone, I can get Gmail to automatically receive all new emails. This can be done in one of two ways. Option one is setting up Gmail’s POP Mail Fetcher. Not all email services offer POP access, but Yahoo! Mail does if you purchase their premium plan (which I did). This tool will basically fetch all new emails from Yahoo! Mail and place them in my new Gmail account.

Option two is setting up automatic forwarding from my old email account. Most email services offer this, as does Yahoo! Mail. This does what you’d expect – it automatically forwards all new emails to my new email address. I haven’t tried this yet to know if changes the “from” field to my old address, however. Anyone know if it does?

Issue #2: Moving All Old Emails to New Email Account

This one’s a toughie. I have years and years of archived emails that I refer to often. It’s valuable data, not just for nostalgic reasons, but for business and reference purposes too. If I ever lost all of that data, I’d curl into a ball and cry. I’m also meticulous about organizing my old emails into their appropriate folders. If I had to tag all of my old emails in Gmail manually, I’d curl into a ball and, well, maybe not cry, but at least sniffle. Is there a way to migrate all of my old emails within their current folder structure, while retaining their “to”, “from” and “date” fields? (e.g. mass-forwarding them all is not an acceptable option.)

Potential Solution? Not Really

Well, howdy doody, a solution exists! Almost. For $9.95 per email account, YippieMove will automatically move all of my old emails to Gmail while retaining the emails’ integrity (e.g. “to”, “from”, and “date” fields) – I think. Their site doesn’t state this explicitly, though they claim that “with YippieMove, the emails will look the same on the destination as it did on the source.” There is one known flaw in the process currently: Gmail lists emails by the date at which they appeared within Gmail, not their actual delivery date. Weird. There’s also a more significant barrier for me… they don’t support Yahoo! Mail as of this post. Major bummer!

So I’m left without a realistic and acceptable solution to this issue for now.

Issue #3: Importing Yahoo! Address Book to Gmail Contacts

My Yahoo! Address Book is my little black book, my Rolodex, my birthdays list, my way of finding my friends’ contact info, everything. Without it, I’d have no way of contacting my friends, since it’s been decades since I’ve memorized a phone number. Keeping the integrity of all this data in Gmail’s Contact list is very important. Can I export my Yahoo! Address Book and import it into Gmail’s Contact list easily?

Potential Solution? Not Really

Almost, but not really. Exporting from Yahoo! Address Book is easy enough. I can get a CSV file formatted for Microsoft (MSFT) Outlook, Mozilla Thunderbird, Palm Desktop, and in a generic Yahoo! CSV format. But when I try importing this into Gmail, it picks up every field except addresses. Gmail expects addresses to come within a single “address” field, whereas every other application I’ve seen separates an address into “street”, “state”, “city”, etc. I haven’t been able to find a way to easily map the separate address fields into one either. Ugh.

Anyone want to write a quick script for concatenating multiple rows into one? Otherwise, I don’t believe a realistic and acceptable solution exists right now.

Issue #4: Importing Yahoo! Calendar to Google Calendar

I put my whole life onto Yahoo! Calendar. Well, not my whole life, but lots of important reminders, meetings, dinners, and other general events. Told you I’m a power user. There have been times where I’ve forgotten a lunch because I didn’t have it on my calendar. (Sorry!) In this multi-task-heavy world of mine, a calendar is a crucial tool in helping to organize and even prioritize all the things I need to do. Can I export my Yahoo! Calendar and import it into Google Calendar list easily?

Potential Solution? Yup!

Whew, the answer here is yes. All I need to do is export my Yahoo! Calendar into a CSV file (with the same format options as Yahoo! Address Book) and import it into Google Calendar. I’ve done this already as a proof of concept and originally ran into a snag – I received a constant “Google Calendar is temporarily unavailable” message for three straight weeks. That’s a heck of a long time for being “temporarily” unavailable. But then one day, my schedule appeared in Google Calendar. I’m not sure what happened, but it was finally a successful import. Whew.

Issue #5: Having the Ability to Use Disposable Email Addresses

Spam hasn’t been an issue for me on Yahoo! Mail (knock on wood). One reason is that I protect my email address vigorously. Another is that I use Yahoo! Mail’s AddressGuard feature a lot, which allows me to create an unlimited number of disposable email addresses to protect me against spam. This is such an important feature that I purchased a Yahoo! Mail Premium account just to have it. Does Gmail have disposable email addresses too?

Potential Solution? Not Really

Sort of. Technically Gmail does have disposable email addresses, but they aren’t as powerful as Yahoo! Mail’s. With Yahoo! Mail, I can create a new base ID before attaching a disposable suffix. For example, if my email address is “mike@yahoo.com”, I can create a new base ID of “mikesmail”. Then I can attach a disposable suffix of “-amazon” for all my Amazon.com purchases. This makes my full disposable email address: “mikesmail-amazon@yahoo.com”. There’s no way a spammer can guess that my actual email address is “mike@yahoo.com” from that. Gmail’s disposable email address method simply attaches a disposable suffix to my real email address. So “mike@gmail.com” becomes “mike+amazon@gmail.com”. I’ll give you a cookie if you can guess what my real email address from that disposable one. C’mon, what kind of spam protection is that?

Sadly, I don’t find this a realistic and acceptable solution right now.

Issue #6: Syncing Google Information with Mobile Phone

I currently have a BlackBerry and access my contact list and schedule frequently. While I use my online contact list and schedule as the master copies, being able to easily sync the two is critical. Being able to access my email is pretty high on the list too. Can Gmail, Gmail’s Contact list, and Google Calendar sync well with the BlackBerry?

Potential Solution? Not Really

Hmmm, there appear to be solutions, though some think it’s a horrible experience. BlackBerry’s native email reader seems to have problems pulling from Gmail’s POP settings. An alternative is to download the Gmail mobile client, though that app isn’t as quick as the native reader. Syncing Google Calendar is easier though. I can download Google Sync to my mobile phone and sync it easily. Sadly, this is not the case for Gmail’s Contact list and BlackBerry’s Address Book. There’s no way to sync those two currently. Ironically, one solution offered by a user on Google Groups is to auto-forward my email to Yahoo! Mail, since Yahoo offers easy syncing with the BlackBerry.

I wonder if the iPhone has any syncing problems with Google’s services. Oh, maybe so. Rats. Again, the lack of a realistic solution is unacceptable.

Conclusion

That’s two out of six possible points that Google’s personal information management tools have scored. Unfortunately for me, that means I can’t realistically and reliably switch over to Gmail, Gmail’s Contact list, and Google Calendar yet. Perhaps someday, Google will improve these tools. But until then, the barriers to entry are just too high. As much as I love their tools, the cons outweigh the benefits. Sorry Google.

The Mike Lee Project

Just for yucks, I decided to create a new website. It’s an idea I had years ago – The Mike Lee Project.

Back in 2005, a filmmaker named Grace Lee created an entertaining documentary called The Grace Lee Project. It chronicled all the Grace Lee’s she knew, showing how utterly common her name is.

I too have a common name. Really. Back in college, I knew of at least 23 Mike & Michael Lee’s. At a previous Big Five firm at which I worked, there were around 17. My last company had 5. We’d get each other’s emails and packages all the time. I once received a lunch invite from a cute coworker. When I replied, “Sure!” she wrote back, “Oops, wrong Mike Lee. Sorry.” Awww. *sniff*

So when I wrote to Grace about her project, she joked that I should do a Mike Lee Project too. Well, I’m no filmmaker. But as a web developer, I figured, why not put up a website? The Mike Lee Project is currently a wiki built off of free MediaWiki software. Any other Mike & Michael Lee can add themselves to the list.

In seeding the wiki with starter content, I found a heck of a lot of Mike & Michael Lee’s. There’s a Michael Lee who’s been the drummer for Robert Plant & Jimmy Page, a Michael Lee character in the show The Wire (great show, BTW), and all sorts of politicians, journalists, actors, programmers, designers, and professors. They’re white, black, Chinese, Korean, and who knows what else.

BTW, in case you’re wondering why I didn’t call it The Michael Lee Project, it’s just because I’ve created a personal brand around “Mike Lee”. And also because michaelleeproject.com is a bit longer to type. But in any case, I nabbed that domain name too. Heh.

P.S. I also just added a survey so other Mike & Michael Lee’s can indicate whether they’re Chinese, Korean, English, Irish, or something else. I don’t expect a lot of responses, but hey, why not?

How to Name a Business

Naming a business can be as hard as naming a baby. Well, maybe not AS hard. But it’s still pretty damn hard.

I’ve been reading Seth Godin’s Small is the New Big and came across his collection of riffs on business naming. Fortunately, he blogged about these as well, from as far back as 2003. (Hey, did he just grab blog posts to make his book??)

Here’s what Godin recommends:

  1. A name that is too descriptive could be too limiting. The less it has to do with your industry, the better. International Postal Consultants is too limiting. Starbucks, Nike, & Apple are good.
  2. Use real English words. Axelon & Altus are bad. Jet Blue, Ambient & Amazon are good.
  3. Make sure it’s easy to spell and pronounce. Prius is a bad name because it can be tricky for some people to spell and pronounce.
  4. Don’t obsess over getting a short name just so you can have a short domain name.
  5. Add a descriptive tagline. Like “Lemonpie, the easy way to learn scuba”.
  6. A name should be unique enough to appear in a web search without a lot of competitors and flexible enough to gain a secondary meaning if you wish to expand your brand.
  7. If you’re creating a whole new product or service, give it a whole new name, not an incremental one. Sneakers is better than athletic shoe.
  8. If you have lots of products and services, come up with a clear naming hierarchy, so customers can understand your offerings. Honda, Honda Civic, and Honda Accord are good. Apple, Apple iPod, and Apple Powerbook are bad, because the “i” prefix isn’t consistent or defensible.
  9. Names with generic words like Central, Land, or World are meaningless. They add no value and are difficult to defend.

Godin’s blog posts: