Developing "Toys" for the Enterprise - It's About Delivering the "Smallest Unit of Value"

Today's TechCrunch post by Aaron Levie of Box - Rise Of The Enterprise "Toys" - and the recent acquisition of Yammer by Microsoft prompted me to dust the cobwebs off of my blog and write a post that I have been thinking about for years.

In his post, Levie talks about enterprise solutions that are initially viewed as "toys" and then they develop into "solutions".  As he puts it...

Students of the Innovator’s Dilemma know that a new technology starts out being just “good enough.” Often, an early solution only serves a niche part of the market with limited requirements. This naturally shields it from the incumbents’ radar, but what starts out as a nascent product attacking an unprofitable or unattractive market segment can quickly mature into a disruptive solution that becomes more than adequate for a broader population.

I completely agree with this approach and I often use - as Levie does in his post - Yammer as the poster child.  When they launched their initial offering in September 2008, they touted it as “Twitter for Companies”.  Many influencers viewed it as a "toy" and as this chart depicts, many of them didn't give Yammer much chance to succeed.  Two years later, they launched Yammer 2.0 as a “Full-Fledged Social Network for the Enterprise” and the industry started to take them a bit more seriously.  Now, after being around for less than four years, they are being acquired by Microsoft for $1.2 billion.  Not bad for a toy.

Throughout the years, as I have consulted for many early-stage enterprise startups, I have found that it is very difficult for many entrepreneurs, particularly those who have been in the enterprise space for a while, to think about developing a toy as they figure out how to penetrate the market.  They often go after the big solution from the onset and end up having a difficult time experiencing much success.  This happens for a variety of reasons.  Having the solution mindset often results in trying to build a broad offering, which is difficult when you have limited resources.  Also, communicating about a broad solution often diffuses the marketing message, which is not great these days when laser-focused messaging is critical to rising above the noise.

The approach I espouse to my early-stage clients is what I call, "delivering the smallest unit of value".  What is the smallest unit of value you can deliver to a segment of users/customers that is consistent with the broader vision you are trying to execute.  Having this type of narrow approach will enable you to focus your development resources and your marketing messages.  

I think it is important to note that taking a narrow approach initially does not take away from the ultimate vision of a company.  But a company that doesn't get started with a focused offering may never experience the early success they need to obtain the resources required to execute their long term vision.

What do you think of developing "toys" versus "solutions"?  What are some other good examples of startups that either succeeded by initially developing a toy, or did not succeed because they started with a solution?

"Influencer Relations" On My Mind

I blog in spurts. How often I blog is a reflection of not only how busy I am, but how excited I am about something that is happening in the technology space. Two, three years ago, I was really into a concept that I called knowledge networking. I now find myself spending a lot of time thinking about the notion of "influencer relations". You can also think of it as "analyst relations 2.0".

Through the PR function, technology start-ups spend a good amount of time and resources developing relationships with press and industry analysts. Historically, the number of press and industry analysts that had influence over a market segment was relatively small so the interactions were small in number and quite structured (i.e., scheduled calls/meetings).

Now, however, due to social mediums like blogs and Twitter, anybody with a following can have an impact on a market segment so the notion of influence has been democratized. This has led to an "influencer ecosystem" that is large in number and real-time (with Twitter, in particular). In addition to the top-tier press and analyst community that everybody focuses on, many market segments have hundreds of other people that blog and tweet and who have hundreds, if not thousands, of followers.

The process of evaluating the influencer ecosystem for a market segment and then engaging with a market's influencers in online conversations is what I call "influencer relations". Engaging effectively with market influencers is not easy but it can be a cost-effective and powerful way to increase the awareness of a brand and to generate traffic to a website.

So "influencer relations" is what I am thinking a lot about these days (pretty sad life, huh?). More to come.

Facebook as a Leading News Reader - I Told You So

I haven't been blogging for a while but I couldn't pass up the opportunity to pat myself on the back. Last March, I did a post, "RSS for the Masses", where I said...

If you take the new version of what used to be called Pages and combine that with the new real-time nature of News Feed, you have an RSS-like capability for the masses. Now, media organizations, like CNN and NY Times, will have their own mini-feed and they will be constantly making status updates with their latest headlines. So if users "friend" these organizations, they will be able to see the headlines stream through their News Feed in real time.

Today, ReadWriteWeb posted an article, "Facebook Could Become World's Leading News Reader (Sorry Google)", where they say...

Is Google Reader better than Facebook for reading feeds? Maybe. There are RSS readers that are better than Google Reader, too. But in terms of change-the-world feed-reading mass adoption - it's most likely to be Facebook that gets millions of mainstream users on board.

Yes, if you saw me right now, you would see a cocky grin on my face :)

Facebook and Social Search

Well, another upcoming feature within Facebook has gotten me to shake off my blogging cobwebs and do a little writing. In fact, it has gotten me to take another look at a blog post I started on December 30, 2008 and never finished...

Over the last year or so, I have been intrigued by a concept I call "knowledge networking". I have written a bunch of posts on the topic and define it as...

the ability for people to connect with the purpose of leveraging each other's knowledge. This is different than social networking where people connect with the purpose of communicating with each other.

Most of my perspectives have been about the role knowledge networking would play in the business world but there is also a place for such a concept in the consumer world. For example, if I was thinking about going to Costa Rica for a family vacation, wouldn't it be nice if I could easily find all of my friends who have already been there? This type of capability is being called "social search".

Recently, TechCrunch published an article entitled, "The Future of Social Search (Or Why Google Should Buy Facebook)". The article talks about the potentially powerful combination of Google's search capabilities with all of the "social" data Facebook has (a la News Feed). I agree this would be a powerful combination but I question why can't Facebook do much of this on their own by enhancing their mediocre search function.

I continually get frustrated with Facebook's search capabilities.

I never finished that last paragraph and now it looks like I don't have to. Yesterday, Facebook disclosed that they have begun limited testing on a new version of Facebook Search. The details can be found here but most importantly in my mind, you will be able to search on the contents of your News Feed (i.e., all of the updates made by your friends). I believe this will be very powerful.

So to go back to the example I used earlier...if I am thinking about going to Costa Rica for a vacation and wanted to find out who else I know has been there, I will be able to do a search on "Costa Rica" in my News Feed and any update that mentions it will be shown in the search results.

It's not clear when Facebook will roll out the new version of search to all of its users but I am very excited about its potential.

RSS for the Masses

Yesterday, Facebook conducted a press event where they previewed changes they are making to their service. Details can be found here. All of the major tech blogs have communicated their take on the announcement. AllFacebook just posted an entry that tries to straighten out "the wide-range of semi-accurate reporting taking place".

I am not one to say whether the reporting has been accurate or not but I do feel that everybody is missing the boat on one of the important implications of the new Facebook features. If you take the new version of what used to be called Pages and combine that with the new real-time nature of News Feed, you have an RSS-like capability for the masses. Now, media organizations, like CNN and NY Times, will have their own mini-feed and they will be constantly making status updates with their latest headlines. So if users "friend" these organizations, they will be able to see the headlines stream through their News Feed in real time. Nice.