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The 3 stages of a services marketplace

The Silicon Valley alter that is the whiteboard

1. The Hands On phase

Like every great episode of Silicon Valley, it all starts with a whiteboard. Customer (demand) and worker (supply) names are written on the board, with relevant skills and availability scribbled down. Everyone gets on the phones and calls each side, trying to make connections. Every connection is a new possibility, a new thread in the web you’re trying to spin. You’re losing money on every one, but if you’re doing it right they start to become sticky.

This means customers are not just delighted that you introduced them to someone that can solve a problem for them, but that it has the seeds of an ongoing relationship. They enjoy working with the person, they need that problem solved ongoing and (for your benefit at least) they see the value you add as the third wheel.

At worst they appreciate the comfort of having you on the phone to handhold them through the process, at best you are a critical part of the value chain that is hard to replicate without scale. Except you don’t yet have scale so this might cost you big time upfront – software, insurance, data, templates, logistics, call centre etc. Don’t resent the cost, because it’s also your barrier to competition. Watch that burn while you find market fit.

2. The Acquisition Marketing phase

Once the relationships are sticky and your churn is under control, you need to scale quickly to bring your unit cost down and start to pay off that upfront investment (or raise on a growth pitch to kick this can down the road). It’s time to look at the chicken and egg problem of liquidity. What services are not getting traction, and how might each translate into an efficient performance marketing campaign?

You probably have no brand equity, so your performance marketing needs to be very targeted and ideally not competing with established sector players. It’s also tricky to scale, because your segments could be very small and fast moving. 95% of marketplaces are demand constrained, so start by focusing on 1 side only.

Start testing campaign segmentation by customer type first until you get your CPA down to at least breakeven, before trying to solve for secondary variables like geography or availability. You’ll also need to start building a view on Lifetime Value (LTV) by each segment, so eventually you can think about bidding based on Return On Ad Spend (ROAS) or similar metrics. But every customer is different, and so this quickly also becomes a scale challenge that will require marketing data investments.

Don’t purely optimise on cost however, as the goal of this phase is to build number of connections not the number of users. Don’t underestimate power users who create a lot of connections even if they don’t spend a lot, you need to talk to and learn to love these people without becoming too dependant.

This phase is why 50% of startup investor’s money goes to Facebook and Google, you need to learn to love their tools and optimise (aka the sexier “growth hacking”) like crazy. But this needs to be just a phase – if you never graduate then you are at the mercy of the next algorithm change and/or well funded competitor. Don’t become the next GroupOn who spent like crazy here but never graduated.

3. The Product Growth Phase

Also called the Network Effect phase. This is the holy grail, where your product flywheel starts to spin and growth happens organically. There are 3 major things required here.

Finally and foremost – you need to understand what part of those calls in phase 1 relied on the human touch, and what was to overcome objective friction. Pour the gold of your customer service team over the trust issues, and scale the rest in-product with great UX that makes your funnel so intuitive as to be invisible.

Focus relentlessly on removing any friction in making a new connection; this could be through removing double commits, applying data and recommendation engines, teaching your users how their behaviour affects their success, systemically weeding out quality and fraud issues and many more concepts.

Finally you should clearly commit only to verticals where you can be number one. Your next key competitor will play in a narrower not a wider vertical than you, so you need to lead market share not just overall but more importantly in the key customer segments you care about. The network effect is a big moat, but it isn’t the winner takes all endgame it was first thought to be.

Wordpress + Google Compute Engine

Migrating WordPress from Dreamhost to Google Cloud

Wordpress + Google Compute Engine

I’ve hosted my WordPress blog on Dreamhost for some years now, as part of a broader hosting package. The decreasing costs of the Cloud have meant that many of the services I used to host have now moved off Dreamhost, and in addition the performance of Dreamhost is quite poor from countries like Australia. Google Cloud now offers a quick deploy WordPress feature and a free tier of Google Compute Engine (IAAS), so I decided to go through the steps of migrating:

  1. Install the Updraft plugin and run the Backup to your Google Drive or other account. Note that the paid version makes this process easier, but is not required.
  2. Signup for a Google Cloud Platform account (if you don’t already have one)
  3. Deploy a new WordPress Single Instance using Cloud Launcher
  4. Ensure you record all the username/password details displayed, including your WordPress admin details
  5. Set your VM to f1-micro (1 vCPU, 0.6 GB memory) to ensure you’re on the free tier (unless you get more traffic than I do)
  6. Log in to your new WordPress instance and use Updraft import to migrate your blog content into the new instance
  7. Create a new External IP address in the Cloud console, making sure you attach it to your recently created VM using the dropdown
  8. Change site url in phpmyadmin
  9. Update your A record in your DNS settings (Dreamhost example) with your domain registrar to point to the new external IP you created in step 7
  10. Test your new site!

Flickrtoplus.com now supports Google Photos

Google Photos iconGoogle Plus photos has been split out into a separate product, Google Photos. As part of this move there were some API changes, in particular an newly enforced requirement to use OAuth 2.0. With some help we managed to get the tool updated after a period of 1-2 weeks of downtime in late June 2015.

Usage volumes have since been steadily increasing: over the period June – December 2015 daily usage has doubled. I’m not sure whether it’s due to a decline in Flickr usage, and increase in Google Photos usage, or a combination of both (my guess). I need to spend some time working on improving the efficiency of the tool over the holiday period, but until then would ask for your patience. It’s working, it’s just a bit backlogged.

NBN Fibre vs MTM comparison

Many people feel that a National Broadband Network is a recent, poorly thought through and unnecessary initiative. The reality is that the Australian Government has had a litany of national broadband plans over the last 12 years. Failed tenders occurred in 2003 (Government – Liberal), 2005 (Private – Telstra), 2006 (Private Optus/Elders + Government – Liberal), 2007 (Government – Labor) before finally in 2009 Labor founded NBNCo to build a Fibre to the Premises (FTTP) network. The demand and planning has evolved exponentially over this time period.

The question therefore is (and has been for 12 years) not if we need a National Broadband Network, but which method is the best? Side by side, you can see that the original NBN plan went through a number of revisions over the years, and also see it presented alongside the new MTM plan produced by the current Australian Government:

2012-15 2013-16 (v12) 2013-16 (v13)(Last NBN revision) 2014-17(First MTM plan, post 2013 election)
Revenues to CY2021 AU$23.1b AU$21.7b AU$19.4b AU$18b
Total capital expenditure AU$37.4b AU$37.4b AU$37.4b AU$30b
Total premises covered 13.176m 13.176m 13.274m Not specified
Total premises activated 8.286m 8.757m 8.788m Not specified
Opex to CY2021 AU$26.4b AU$26.4b AU$26.9b AU$27b
Funding: Government equity AU$30.4b AU$30.4b AU$30.4b AU$29.5b
Funding: Debt AU$13.7b AU$15.2b AU$13.8b AU$12b
IRR 7.1% 7.1% 7.1% 3.2%-5.4%
Rollout method FttP Build drop FttP (NBN 2.0) Build drop FttP (NBN 2.1) MTM
Total premises passed by end FY2015 3.664m 3.202m 2.507m 1.093m
Average Download Speed 100Mbps 100Mbps 100Mbps 46Mbps

From ZDNet

Overall the maths and tradeoff is fairly clear, a 20% reduction in cost (capex reduction of $7.4b) results in a 54% reduction in speed. Of course given the current economic pressures this can be seen as a necessary evil, despite the significant deterioration in cost benefit.

There are two hidden factors that make this seemingly simple tradeoff more painful:

 

1) Copper produces incredible variations in connection speed

 

MTM speed estimates for Woy Woy, NSW

MTM speed estimates for Woy Woy, NSW

Full transparency, I work for YouTube. We are a service that is greatly affected by variable connection speeds, but we are not alone: Netflix, Pandora, Spotify, Quickflix etc. are all impacted. When someone like Netflix or Apple looks to bring a service to Australia, consistency of service delivery is an absolute requirement. It took Netflix 7 years before they would launch in Australia. If Netflix can’t justify launching in Australia, how can a start-up every achieve scale within the already small pool of Australian connections? It’s not possible, and moving overseas quickly becomes the obvious solution. To the right is a graph of what connection speeds will look like in one of the cherry picked MTM trial sites in Woy Woy, NSW. This doesn’t even take into account variations in speed due to weather, something copper is prone to. The fibre NBN on the other hand delivers almost uniform consistency across the country at all times.

 

2) Copper costs $1b a year to maintain (as of 2014, the government’s problem)

 

Copper lines are a very expensive asset that is rapidly declining in value. In the original NBN deal the copper was not included, instead NBN only got access to ducts and would pay Telstra as lines were decommissioned – a way to link pit remediation to Telstra’s financial incentives. Under the new MTM deal with Telstra signed in December 2014 there was almost no change, except that the copper was given by Telstra to the Government for $0 extra. Of course the devil in the detail is that the copper network currently comes with a $1b annual maintenance bill. If the government now needs to take over this maintenance bill, and rework the entire Telstra HFC network, who could they turn to for help? Of course Telstra will win the majority of this contract, they know the infrastructure better than anyone and are already winning 50% of the new contracts the NBN is handing out post-deal. That’s why I bought shares in Telstra.

 

So in conclusion, what’s the real trade-off?

 

The $7.4b capex reduction from the MTM to 2021 is neatly replaced by 7 years worth of copper maintenance at $1b a year. Even if it’s slightly less then $1b, the overall benefit at 2021 will be less than $1b in savings for a 54% decline in speed.

This also completely ignores the facts that the NBN fibre network will have lower ongoing maintenance costs, power costs, has near complete speed uniformity across the network, delivers a 2%+ higher IRR for the government and will be upgraded to 10x (1000Mbps) speed for absolute minimum cost.

Unfortunately in modern politics is seems anything beyond a 4 year term is irrelevant to the debate, and instead the focus is on what can be delivered as cheaply as possible before the next election on or before Jan 2017. That’s about the only time in history where the MTM will look even marginally better.

FlickrToPlus.com Screenshot

FlickrToPlus.com – Flickr to Google Plus Migration Tool

FlickrToPlus.com Screenshot

FlickrToPlus.com Screenshot

I have been using Google Plus a lot more lately, and now feel that the social layer (permissions and annotations) adds substantially to the photo experience. I know this is not a new revelation, but as a long time Flickr Pro customer I felt that the options of “Friends” or “Family” visibility, when I don’t really have either on Flickr, were not enough. Therefore over the 2012 Christmas holiday break I decided to work on a new web tool, FlickrToPlus.com.

There are two really annoying things about doing this migration for me:

  1. Losing metadata – especially titles and geo data
  2. Downloading/Uploading every file

This tool solves both these problems with the help of the Flickr and Picasa API’s. In fact my server doesn’t even see the photo files, you can pass a Flickr original image URL directly to the Picasa API. This means the service is fast and reliable. All you need to do is log in with both Flickr and Picasa, and then check the box against the set you would like to migrate. The site will then provide a progress update on the migration status. Google Plus albums and Picasa albums are currently pretty much the same thing, so these migrated albums are available straight away in the Google Plus interface for sharing with your friends.

Please give it a try and let me know what you think!

Final Olympics 2012 YouTube Live gadget

YouTube Olympic streaming in 64 countries

Final Olympics 2012 YouTube Live gadget

YouTube.com/Olympics gadget currently Live

The London 2012 Olympics was the highest profile program I have worked on for YouTube. I was responsible for the IOC YouTube Channel – youtube.com/olympic. This channel only displayed the full content experience for 64 countries during the games across APAC; the largest being India, Indonesia, Malaysia and Singapore. These 64 countries received 11 live channels running 1200 live events in 1080p HD for 18hrs a day, plus nearly all archived content available. It was a huge process to get this content uploaded, named, categorised into playlists and keywords, and finally navigable in a custom gadget.

The result was well worth the effort, we received 72 million streams just during the 2 week period. Subsequently the content geo-restrictions were removed, and the channel view count has since broken the 100 million views mark. All the global statistics are wrapped up in this official blog post.

This first Olympics has built a solid subscriber base for future events, lifting the number of subscribers by 360k to almost 500k. This is a huge and engaged audience that will be waiting for the next big Olympics event to start. It was great to be a part of this program, and I hope it is seen as a template for how large events can play out online in the future.

WhatsLiveNow.com launched

In an effort to get back into coding and learn the YouTube API’s better I have put together a very simple site, www.whatslivenow.com. It simply checks the YouTube Live API every 15 minutes, saves the results to a MySQL database, and then displays the latest live events ranked by how many “Likes” they have had. This makes the chart a little less dynamic than I would have liked, but the viewCount parameter isn’t currently being populated, so my preference to rank based on what has the most current viewers isn’t possible.

It’s also a nice experiment with CSS and jQuery Mobile, using a template I found called Splitview. I had to make a number of changes to make it work for this example, but visually it looks pretty simple and is very functional across desktop, tablet and mobile devices. I will play around with the functionality over time, but for now I am happy that the experiment was a success. I think with the addition of some social media functionality it could be a nice second screen experience too. Please let me know what you think!

Admonsters Presentation on “The Future of Video”

AdMonsters logoOn the 22nd of March 2012 I attended the 2nd ever Admonsters Conference in Sydney, Australia. I presented on the Future of Television, and chose to focus on my personal perspective around the accelerating convergence of video advertising and content as it moves online. My inspiration sprouted from statistics and creative used in Robert Kyncl’s CES talk and some video engagement ideas from Kevin Allocca.

It was an honour to be able to present in front of colleagues in the same niche profession, especially in my home town which is a geographically obscure place to be doing such a role. My biggest mistake was underestimating their involvement with video advertising – I thought the number would be around 10%, but it turns out 80% of them work with video. It was exciting to see the local market maturity, but it was a little humbling to see all those hands raised at the end of an entry level video presentation. I did however thoroughly enjoy the presentation and I received a number of comments from others that really got something out of it. I really do feel that content marketing is a massive growing area, however I acknowledge that it’s a difficult area to strike a perfect balance in. If it was easy then YouTube would have no paid advertising and I wouldn’t have a job. 🙂

If you are interested in seeing the deck I presented, then please Download the Presentation Slides.

Finishing my San Francisco Rotation

My 35 days of living in a corporate apartment in SOMA, San Francisco have come to an end! I decided to record my impressions in a video (of course) log from the YouTube headquarters in San Bruno.

Life in Start-up Country

Life of a Start-up
Living in a corporate apartment in the SOMA district of San Francisco is pretty glamorous. Cheerios, bottled pasta sauce, a coffee percolator and a laptop on the couch. Still, it’s quite a good experience and I have enjoyed the feeling of being amongst it all. Luckily I actually still get a wage from a company that is doing better than break-even, so I guess I’m not really living the start-up lifestyle.

Meetings happen faster here, you don’t have to think about timezones and languages so much and you can talk to product face to face if you don’t agree with their direction. These are things that are easy to take for granted if you work in the US. On the flip side the diversity and distance challenges in APAC make it an incredibly exciting area to be working in.

It would be nice to have the best of both worlds, but not sure when or if that will happen. I’m starting to think that the best way to operate is to make APAC as self-sufficient as possible. Borrow the good things, and go it alone in areas you don’t agree. I think we can even get to the point where APAC is the innovative region and the US can learn from us. That sounds like an inspiring challenge to me. It’s not quite a start-up, but it’s the same skills right?

 

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