Ross Mayfield's Weblog

Blog-based Research Model

James Enck of Daiwa Securities suggests that bloggers like Andy, Om and Martin are providing a disruptive alternative to sell-side research.

Investment banks: you have competition, whether you know/believe it or not. It behaves differently from you, uses different tools, and takes no prisoners. More importantly, its mindshare is growing, and you ought to be scared. What happens when one day your client base wakes up and feels confident enough to say they don't want your research?

Om Malik points out strengths and weaknesses:

As reporters, you are essentially doing the job of an analyst, foraging out exclusive information, or opining with smart option - without building financial models....What blogs have done is basically given many of us the ability to do this in real time...Regardless, the model, however is still evolving. Why? First, the tools are basically not-friendly to us writers and information foragers. I think connecting the dots, or should I say posts, is still difficult. We cannot produce a coherent and perhaps meta-linked research & analysis report using blogs for now.

Last week I presented at KM & Intranet World alongside Mike from Techdirt -- which not only delivers public analysis, but custom corporate intelligence via private blogs. They have hit upon the beginnings of a cost effective method of delivering post-by-post analysis that engages the research client in conversation. We see a similar model arising with consultants using Socialtext with shared client spaces.

Overall, the model decreases transaction costs for publishing and client interaction. The client service shifts from the end analysis product (.pdf) to the open process of research. Some of this process can be shared for free on public blogs, some of it is a private value added service.

Eurobound

Heading to Europe November 7-19th to visit some customers and attend Cal-IT. Posted my travel schedule on a wiki, hopefully I can see some friends along the way.

Flying to Europe and within Europe is ridiculously cheap these days.

Socialtext Slashdotted

Got Slashdotted today, with the question is the whole world going to be using wikis instead of the proprietary dinosaurs like Lotus Notes?

Servers held up nicely.

Cells From the Wrong Stem?

Stem Cell research is one of those issues that if you are not behind it you might end up dead because of it. However, when the debate shifts from fact or value to policy, the devil is in the details. Mitch Kapor provides a well reasoned argument for why Californians should vote against Proposition 71 which legalizes stem cell research. Simply put, it establishes a corruption-prone body to regulate while ethical and intellectual property issues are ill-defined.

Unfortunately I can't disagree with Mitch's arguments. Direct democracy results in poorly deliberated policy choices for voters that side with them at face value. But referendums will remain with us, so how do we adapt?

The real reason I can't disagree with Mitch is I do not have confidence in the subsequent progression policy can take:

• The proposition establishes a corruption prone bureaucracy, but our new tools for reformist political pressure have yet to be tested outside an electoral context. I would vote for this initative if I had confidence that pragmatic reform was possible.
  
• The California law is purposely a bold move and drafters should be commended for their intent progressive change. The next move, as is the case on other legalization issues with California (ahem: cough), is applying pressure at the Federal level. Where this legislation belongs. But for all our talk, while we are empowered to shame and dethrone politicians, we have yet to apply pressure to issues successfully. I would vote for this initative if I had confidence it would prompt a Federal policy that would subsume it (at least I can vote for Kerry).

Progressive issues or not, we have a broken electoral system (as will be the only topic of debate, again, post-election). Turning good intentions into good policy is an iterative collective process.

Dialed Out

I'm on dial-up this week because SBC Yahoo! DSL took it upon themselves to disconnect a phone line and DSL account in error, so I am transitioning service providers. Interm effects:
* Only reading full text feeds
* Less del.icio.us
* Asynchronous messaging

Read on for customer service woe...

The problem stems from a discussion with a DSL department rep that weighted the options of removing a redundant phone line that was only a legacy connection for sake of DSL. Their offer required locking into a new contract, which I wouldn't do for situations like these. I never agreed to terminate the line or disconnect the service, and instead only changed calling plans, but they took it upon themselves for whatever reason. Saturday I spoke with someone that didn't know they took this course of action and agreed to do a truck roll to diagnose why there was no dial tone. Called Sunday when they didn't call or show, and they said the line department only works on Monday. Monday the line department informed me that the line was disconnected. After on rep at SBC placing an order for the service I already had with a new $50 fee, a second at the DSL department redid the order, eliminated the redundant line, waived the fee and didn't require a contract. Still have to wait a week for somebody to throw a switch.

I have had a good experience with a Tier 2 rep from SBC crediting me for a call to China that wasn't made by applying human judgment to the call detail record (CDR) exception. Sadly, this itself is an exception and I might throw the switch myself.

Wikinews

According to Dan Gillmor, the Wikipedia community is debating if they want to create Wikinews, the ultimate in participatory journalism. This is just the community to do it, not just because they have the numbers and that it will be different from existing media -- but they have to.

In the News articles on Wikipedia already provide alternative group coverage. The problem is that with big events, they need to fork reference articles from news articles. The Wikinews page acknowledges this:

Wikinews articles provide very detailed information about specific events...Wikipedia articles provide condensed information about a series of events

What's interesting is how they want to extend wiki coverage to include original reporting by citizen journalists, going beyond citing external sources. What's different is unlike how blogging's individual voice leads to genre remediation closer to opinion columns, the group voice of wiki may lead participants to strive for genres higher with more robust journalism practices. This is why they are adding a review and fact-checking process before articles are published. You can see and contribute to articles under development, but the very existence of this criteria, similar to what they are doing to create a print version of Wikipedia -- is a perfect meld of top-down and bottom-up practices.

Testing Newsgator Ratings

I'm testing the use of ratings from Newsgator Online Services with this post.

Delay to Drink Ratio

My one-hour flight to LA was delayed for two hours. Curious how the ratio to flight delays and requests for free drinks is directly porportional.

I'm waiting for the airline that rewards your tolerance of failure with miles.

Yahoo Acquires Stata Labs

Wonderful news. Socialtext customer and good friends fighting the good fight, Stata Labs, have been acquired by Yahoo!

Stata makes Bloomba, an Outlook-killer email client with deep search, labling and RSS support. Its a little like Gmail for the client. They also make SAproxy Pro, what Consumer Reports dubbed the leading spam filter.

Here's when I discovered Bloomba and notes from CTO Raymie Stata at PC Forum. Here's a case study and an article on how they use Socialtext, particularly our ability to email a page and receive email notifications.

Interesting to think about the combination of Bloomba, Oddpost and other Yahoo! assets. Microsoft, Google and Yahoo! are truly going head to head, and almost in step, on search and communications.

The Sales Learning Curve

Last week I attended a VC hosted dinner with a presentation by Mark Leslie on the Sales Learning Curve. Mark took just $6M in invesment and turned it into the 5th largest software company in the world, Veritas. He has been teaching at Stanford GSB and is now with one of my favorite firms, El Dorado Ventures. Turns out much of the talk is covered in a blog post by Mark on AO (thanks for the link, Jeff).

Every manager should get their arms around this:

This method of establishing a sales force is called the sales learning curve (SLC). It's a concept adapted from the manufacturing learning curve (MLC), which is widely accepted in the manufacturing sector. The MLC states that the cost to produce the early units of a new product normally is high, but over time, as the production team learns how to optimize manufacturing and wring-out costs, volume increases and per-unit product costs decline sharply.

When we apply the MLC to sales, we come to the following conclusion: The time it takes to achieve cash flow breakeven is reasonably independent of sales force staffing. It is, instead, entirely dependent on how well and how quickly the entire organization learns what it takes to sell the product or service while incorporating customer feedback into the product itself. Because the entire organization has to come up to speed, hiring a large initial sales staff does not speed up the time to breakeven, it simply consumes cash more quickly...

Rather than starting with a large sales force, a company using the SLC is better served by hiring a small team of sales execs with the analytical skills and patience to lead the company through an iterative learning process that includes the continuous discovery and solution of small but crucial problems...

By adhering to the sales learning curve model of sales force staffing, you can safely toss out that old adage we started with. It doesn't have to take longer and cost more than you planned.

What I like about Mark's model is it centers on organizational learning, what I believe to be the real first mover advantage. Its more than just being first, but having lightweight processes the drive iteration with customers. She who iterates early and often wins.

Sales hires are perhaps the most dangerous calls and executive can make. The SLC model provides a rationale for pulling the trigger, for both hiring and firing. Its tempting to throw people at a problem, especially when each could be a profit center in their own right and overhiring can be downright deadly for a startup. There is an addage, particularly with VCs, that the best approach is to hire slowly and fire quickly -- with the latter ruthlessly applied to salespeople. But its the job of the CEO to ensure that enough organizational learning has taken place and been applied to justify this action.

One approach we have found effective is the use of a Sales Blog shared with the entire company where customer interactions are noted. Contributing to it can be as easy as sending or forwarding an email. When we engage our agile planning process, sometimes directly with customers, we can draw upon these interactions and insights with ease. We have also taken the agile methodology to task, iterating in small monthly cycles with continous requirements gathering, planning, testing and analysis. And our customers seem to like it that way.