What Would Google Do?
Jeff Jarvis
For Tammy, Jake, and Julia
Contents
WWGD?
It seems as if no company, executive, or institution truly understands how to survive and prosper in the internet age. Except Google. So, faced with most any challenge today, it makes sense to ask: WWGD? What would Google do? In management, commerce, news, media, manufacturing, marketing, service industries, investing, politics, government, and even education and religion, answering that question is a key to navigating a world that has changed radically and forever. That world is upside-down, inside-out, counterintuitive, and confusing. Who could have imagined that a free classi?ed service could have had a profound and permanent efect on the entire newspaper industry, that kids with cameras and internet connections could gather larger audiences than cable networks could, that loners with keyboards could bring down politicians and companies, and that dropouts could build companies worth billions? They didn’t do it by breaking rules. They operate by new rules of a new age, among them: ? Customers are now in charge. They can be heard around the globe and have an impact on huge institutions in an instant. ? People can ?nd each other anywhere and coalesce around you—or against you. ? The mass market is dead, replaced by the mass of niches. ? “Markets are conversations,” decreed The Cluetrain Manifesto, the seminal work of the internet age, in 2000. That means the key skill in any organization today is no longer marketing but conversing. ? We have shifted from an economy based on scarcity to one based on abundance. The control of products or distribution will no longer guarantee a premium and a pro?t. ? Enabling customers to collaborate with you—in creating, distributing,
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marketing, and supporting products—is what creates a premium in today’s market. ? The most successful enterprises today are networks—which extract as little value as possible so they can grow as big as possible—and the platforms on which those networks are built. ? Owning pipelines, people, products, or even intellectual property is no longer the key to success. Openness is.
Google’s founders and executives understand the change brought by the internet. That is why they are so successful and powerful, running what The Times of London dubbed “the fastest growing company in the history of the world.” The same is true of a few disruptive capitalists and quasi-capitalists such as Mark Zuckerberg, founder of Facebook; Craig Newmark, who calls himself founder and customer service representative—no joke—at craigslist; Jimmy Wales, cofounder of Wikipedia; Jef Bezos, founder of Amazon; and Kevin Rose, creator of Digg. They see a different world than the rest of us and make diferent decisions as a result, decisions that make no sense under old rules of old industries that are now blown apart thanks to these new ways and new thinkers. That is why the smart response to all this change is to ask what these disrupters—what Mark, Craig, Jimmy, Jef, Kevin, and, of course, Google—would do. Google generously shares its own philosophy on its web site, setting out the “10 things Google has found to be true.” They are smart but obvious PowerPoint lines helpful in employee indoctrination (especially necessary when your headcount explodes by 50 percent in a year—to 16,000 at the end of 2007 and to 20,000 before the end of the following year): “Focus on the user and all else will follow,” Google decrees. “It’s best to do one thing really, really well. . . . Fast is better than slow. . . . You can make money without doing evil. . . . There’s always more information out there. . . . The need for information crosses all borders. . . .” These are useful, but they don’t tell the entire story. There’s more to learn from watching Google. The question I ask in the title is about thinking in new ways, facing new challenges, solving problems with new solutions, seeing new opportunities, and understanding a different way to look at the structure of the economy and society. I try to see the world as Google sees it, analyzing
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and deconstructing its success from a distance so we can apply what we learn to our own companies, institutions, and careers. Together, we will reverse-engineer Google. You can bring this same discipline to other competitors, companies, and leaders whose success you ?nd puzzling but admirable. In fact, you must. Google is our model for thinking in new ways because it is so singularly successful. Hitwise, which measures internet traffic, reported that Google had 71 percent share of searches in the United States and 87 percent in the United Kingdom in 2008. With its acquisition of ad-serving company DoubleClick in 2008, Google controlled 69 percent of online ad serving, according to Attributor, and 24 percent of online ad revenue, according to IDC. In the U.K., Google’s ad revenue grew past the largest single commercial TV entity, ITV, in 2008, and it is next expected to surpass the revenue of all British national newspapers combined. It is still exploding: Google’s traffic in 2007 was up 22.4 percent in a year. Google no longer says how many servers its runs—estimates run into the millions— and it has stopped saying how many pages it monitors, but when it started in 1998, it indexed 26 million pages; by 2000, it tracked one billion; and in mid-2008 it said it followed one trillion web addresses. In 2007 and again in 2008, says the Millward Brown BrandZ Top 100, Google was the number one brand in the world. By contrast, Yahoo and AOL, each a former king of the online hill, are already has-beens. They operate under the old rules. They control content and distribution and think they can own customers, relationships, and attention. They create destinations and have the hubris to think customers should come to them. They spend a huge proportion of their revenue on marketing to get those people there and work hard to keep them there. Yahoo! is the last old-media company. Google is the ?rst post-media company. Unlike Yahoo, Google is not a portal. It is a network and a platform. Google thinks in distributed ways. It goes to the people. There are bits of Google spread all over the web. About a third of Google’s revenue—expected to total $20 billion in 2008—is earned not at Gm but at sites all over the internet. Here’s how they do it: The Google AdSense box on the home page of my blog, Bm, makes me part of Google’s empire. Google sends me money for those ads. Google sends me readers via search. Google bene?ts by showing those readers more of its ads, which it can make more relevant,
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effiective, and pro?table because it knows what my site is about. I invited Google in because Google helps me do what I want to do. I, in turn, help spread Google by putting its ads on my page and by embedding its YouTube videos, Google Maps, and Google search box on my blog. When I link to a page on the internet, I help Google understand what that page is about and how popular it is. I make Google smarter. With our clicks and links, we all do. Google is clever enough to organize that knowledge and take advantage of it. It exploits the wisdom of the crowd, and thereby respects us in the crowd. Google trusts us (well, most of us, except those damned spammers—but then Google has ways to ferret out the evil few among us). Google realizes that we are individuals who live in an almost in?nite universe of small communities of interest, information, and geography. Google does not treat us as a mass. Google understands that the economy is made up of a mass of niches—that small is the new big. Google does not see itself as a product. It is a service, a platform, a means of enabling others that so far knows no limits. As hard as it is to imagine today, Google could fail. It could grow too gangly to operate efficiently (I’ve heard rumblings from insiders that it’s getting harder to accomplish things quickly because the company is just so huge). It could grow so dominant that government regulators try to break it up. In 2008, the U.S. Justice Department hired a top litigator to investigate Google’s deal to serve ads on Yahoo and its dominance of the advertising market (though it should be noted that Google gained that position with the eager acquiescence of Yahoo, newspapers, and ad agencies). Google could also grow so big that it becomes hard to grow bigger; that’s already becoming the case. Google could lose our trust the moment it misuses the data it has about us or decides to use our growing dependence on it as a chokehold to charge us (as cable companies, phone companies, and airlines do). It could lose its way or just screw up. When Gmail had a rare moment of dysfunction, Google CEO Eric Schmidt reminded the world, “We’re not perfect.” So don’t get hung up on trying to be Google, on mimicking what Google does. This book is about more than Google and its own rules and about more than technology and business. It’s about seeing the world as Google sees it, ?nding your own new worldview, and seeing differently. In that sense, this isn’t a book about Google. It’s a book about you. It is about your world, how it is changing for you, and what you can gain from that.
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It is hard to name an industry or institution—advertisers, airlines, retailers, auto makers, auto dealers, consumer-products brands, computer companies, fashion designers, telephone companies, cable operators, political candidates, government leaders, university educators—that should not be asking: What would Google do? I will help you answer that question for your own world in the next section of this book, interpreting the wisdom of Google’s ways as a set of rules to live and do business by in any sector of society. Then, in the following section, I’ll illustrate how these laws can be applied across many companies, industries, and institutions, analyzing each as an exercise in thinking and acting differently. Finally, I examine how Googlethink is affecting our lives and the future of Generation Google. We begin by examining the new power structure in our economy and society, where we, the people, are suddenly in charge—empowered by Google.
Google Rules
New Relationship
Give the people control and we will use it Dell hell Your worst customer is your best friend Your best customer is your partner
Give the people control and we will use it
Before getting to Google’s laws, allow me to start with my own ?rst law, learned on the internet: Give the people control and we will use it. Don’t, and you will lose us. That is the essential rule of the new age. Previously, the powerful— companies, institutions, and governments—believed they were in control, and they were. But no more. Now the internet allows us to speak to the world, to organize ourselves, to ?nd and spread information, to challenge old ways, to retake control. Of course, we want to be in control. When don’t you want to be the master of your work, business, home, time, and money? It’s your life. Why would you cede control to someone else if you didn’t have to? And once lost, wouldn’t you take it back if given a chance? Th is empowerment is the reason we get so much angrier today when we are forced to wait on hold for computer service or at home for the cable guy or on the tarmac to get to our destination. It is why we lash out at companies—now that we can—on the web. But it is also why, when we are treated with respect and given control, we customers can be surprisingly generous and helpful. Many good books have hailed the rise of the new, empowered customer. In this book, we ask: What should you do about it? How should this power-shift change the ways companies, institutions, and managers work? How do you survive? How do you bene?t? The answer—the ?rst
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and most important lesson in this book—is this: Companies must learn that they are better off when they cede control to their customers. Give us control, we will use it, and you will win.
Dell hell
Here is a case study in Jarvis’ First Law involving Dell and me. But it isn’t about me, the angry customer. It is about how Dell transformed itself from worst to ?rst in the era of customer control. Dell had been the poster child for what you should not do. Then it became a model for what you should do. After I quit my job as a media executive and left my expense account behind, I had to buy a new laptop. I bought a Dell, because it was inexpensive and because Dell had a reputation for good customer service. To be safe, I paid extra for at-home service. From the moment I ?rst turned on the computer, it had problems. I’ll spare you the excruciating details of my shaggy laptop story. Suffice it to say that the computer had a number of bugs and I tried to ?x them a number of times, spending countless hours on hold with people in faraway lands. Though I had paid for in-home service, I had to send the machine in to get it ?xed, only to ?nd something new wrong every time I got it back. Each time I dared to contact Dell, I had to start from square one: Sisyphus on hold. I never made progress. It drove me mad. Finally, in hopeless frustration, I went to my blog in June 2005 and wrote a post under the headline, “Dell sucks.” Now that’s not quite as juvenile as it sounds, for if you search Google for any brand followed by the word “sucks,” you will ?nd the Consumer Reports of the people. I wanted to add to the wisdom of the crowd—which Google now made possible. I wanted to warn off the next potential customer who was smart enough to search for “Dell sucks” before hitting the buy button (which I should have done in the ?rst place; the knowledge was there, at Google—all I had to do was ask). There were already a few million results for “Dell sucks.” Mine was just one more. I didn’t think I could ?x my problem this way. I didn’t think anything would come of it. But I got to vent steam. And that made me feel better. If I had known that my post would spark a popular movement and PR avalanche, I might have been more temperate in my language. But, hey, I was angry. This is what I blogged:
Jeff Jarvis
I just got a new Dell laptop and paid a fortune for the four-year, in-home ser vice. The machine is a lemon and the service is a lie. I’m having all kinds of trouble with the hardware: overheats, network doesn’t work, maxes out on CPU usage. It’s a lemon. But what really irks me is that they say if they sent someone to my home—which I paid for—he wouldn’t have the parts, so I might as well just send the machine in and lose it for 7–10 days—plus the time going through this crap. So I have this new machine and paid for them to FUCKING FIX IT IN MY HOUSE and they don’t and I lose it for two weeks. DELL SUCKS. DELL LIES. Put that in your Google and smoke it, Dell.
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Then something amazing happened. At ?rst a few, then a score, then dozens and hundreds and eventually thousands of people rallied around and shouted, “What he says!” They left comments on my blog. They wrote blog posts elsewhere and linked to mine, spreading my story to thousands, perhaps millions more, and expanding Dell’s anti–fan club. They emailed me, telling me their sad sagas in excruciating detail—and some continue to email me to this day. The tale took on a life of its own as links led to more links and to a broader discussion about blogs, customers, and companies. We bloggers decided this was a test: Was Dell reading blogs? Was it listening? Houston Chronicle tech columnist Dwight Silverman did what reporters do: He called Dell to ask for its policy on blogs. “Look, don’t touch,” was the of?cial reply. If customers want to talk to Dell, the spokeswoman said, they should talk to the company on its site, on its terms. But Dell’s customers were already talking about Dell away from its site and control, on their own terms. Soon, my blog posts were appearing progressively higher in Google search results for Dell, reaching the precious ?rst page, only a few slots behind the link to Dell’s home page. The conversation about my blog post was beginning to damage Dell’s brand. About this time, Dell’s vital signs began falling. Customer-satisfaction ratings fell. Revenue results disappointed analysts. The share price dove, eventually losing half its value from about the time this saga began. That
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wasn’t entirely my fault. I swear it wasn’t. Though some have given me credit or blame for cutting Dell down to size, it’s not true. I hardly did a thing. All I did was write a blog post that became a gathering point for many of my fellow frustrated Dell customers. They now stood beside me brandishing pitchforks and torches, brought together by the coalescing power of the internet, blogs, and Google. They were the people—not me—who should have been heeded by the company and by the analysts and reporters covering it. They told the real story of what was happening to Dell. Two months after my Dell hell began, in August 2005, BusinessWeek told the tale in print. Under the headline, “Dell: In the bloghouse,” the magazine wrote:
PC industry circles have been buzzing in recent months that Dell’s customer support is slipping—a claim bolstered on Aug. 16 by a University of Michigan study that showed a hefty decline in customer satisfaction from a year ago. So the last thing Dell needed was for someone to turn the customer-service issue into a cause célèbre. Enter Jeff Jarvis.
About this time, I managed to get a refund for my laptop, though not as the result of blogging. I had sent an email to the company’s head of marketing and, for snarky good measure, its chief ethics officer. The nice and patient lady whose job it is to talk to the irritants who get through to vice presidents called to offer help. She reached me on my mobile phone, I swear, just as I was in a computer store shopping for my Mac. She off ered to exchange my computer for a new Dell laptop. I told her that I had lost trust in the company’s products and services and just wanted my money back. She gave it to me. And so, that August, I shipped the machine back and believed my Dell odyssey had ended. In what I thought was the ?nal act in my silicon opera, I blogged an open letter to Michael Dell offering sincere and, I believed, helpful advice about bloggers and customers, who are more often now one and the same.
Your customer satisfaction is plummeting, your market share is shrinking, and your stock price is de?ating.
Jeff Jarvis
Let me give you some indication of why, from one consumer’s perspective . . . The bottom line is that a low-price coupon may have gotten me to buy a Dell, but your product was a lemon and your customer service was appalling. . . . I’m typing this on an Apple PowerBook. I also have bought two more Apples for our home. But you didn’t just lose three PC sales and me as a customer. Today, when you lose a customer, you don’t lose just that customer, you risk losing that customer’s friends. And thanks to the internet and blogs and consumer rate-and-review services, your customers have lots and lots of friends all around the world.
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I told him about my fellow customers who’d chimed in with their complaints. I suggested he should have interns—better yet, vice presidents— reading what the world was saying about the company in the blogosphere. I also mentioned the big-time press, including BusinessWeek, that had picked up the story. Mocking Dell’s own commercials, Fast Company magazine turned customer complaint online into a verb: “You got Dell’d.” But the tale I really loved, which I recounted in my open letter, came from Rick Segal, a blogging venture capitalist in Toronto who sat next to a couple of bank tellers in his office building’s food court and heard them discussing the saga. That is how easily things spread online. Segal blogged the scene:
Lady one: “I was going to buy a new Dell but did you hear about Jeff Jarvis and the absolute hell he is going through with them?” Lady two: “Yeah, I know, the IT guy told me that. . . .”
Segal had his own advice for Dell. “The pay-attention part: Lots of people (Dell?) are making the assumption that ‘average people’ or ‘the masses’ don’t really see/read blogs so we take a little heat and move on. Big mistake.” My advice for Dell continued with four simple tips:
1. Read blogs. Go to Technorati, Icerocket, Google, Bloglines, Pubsub, [search engines for blogs] and search for Dell and read what they’re saying about you. Get it out of your head that these are “bloggers,” just strange beasts blathering. These are
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consumers, your marketplace, your customers—if you’re lucky. They are just people. You surely spend a fortune on consumer research, on surveys and focus groups and think tanks to ?nd out what people are thinking. On blogs, they will tell you for free. All you have to do is read them. All you have to do is listen. 2. Talk with your consumers. One of your executives said you have a look-don’t-touch policy regarding blogs. How insulting that is: You ignore your consumers? You act as if we’re not here? How would you like it if you gave someone thousands of dollars and they ignored you? You’re not used to being treated that way. Neither are we. It’s just rude. These bloggers care enough to talk about your products and service and brands. The least you can do is engage them and join the conversation. You will learn more than any think tank can ever tell you about what the market thinks of your products. But go to the next step: Ask your consumers what they think you should do. You’ll end up with better products and you’ll do a better job selling them to more satis?ed customers who can even help each other, if you’ll let them. It’s good business, gentlemen. 3. Blog. If Microsoft and Sun and even GM, fercapitalismsake, can have their smartest [executives] blogging, so why shouldn’t you? Or the better question: Why should you? Because it’s a fad? No. Because it will make you cool with your kids? No. Blog because it shows that you are open and unafraid—no, eager—to engage your consumers, eye-to-eye. 4. Listen to all your bad press and bad blog PR and consumer dissatisfaction and falling stock price and to the failure of your low-price strategy and use that blog to admit that you have a problem. Then show us how you are going to improve quality and let us help. Make better computers and hire customer service people who serve customers.
“If you join the conversation your customers are having without you,” I concluded, “it may not be too late.” At last count, there were more than
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600 responses to that blog post alone from fellow customers. One said: “I didn’t know Dell had dropped the ball as far as quality was concerned. A few years ago, I would still be in the dark. The new grapevine is a great thing for consumers.” That was that, or so I thought. But eight months later, in April 2006, Dell began doing what I suggested and what others said would have been expensive and impractical: The company dispatched technical support staff to reach out to bloggers who had complaints, offering to solve problems, one at a time. Guess what happened: When technicians ?xed bloggers’ issues, Dell was rewarded with pleasantly surprised blog buzz. Bad PR turned good. Dell discovered that, contrary to what skeptics thought, this direct conversation with customers was an efficient way to learn about problems and solve them. That July, Dell started its own blog, Direct2Dell. It got off to a rocky start, doling out promotion of the company and its products and not addressing the many elephants in its room. But after a few weeks, chief company blogger Lionel Menchaca entered the discussion with disarming directness and openness, linking and responding to Dell’s critics and promising: “Real people are here and we’re listening.” He publicly discussed the case of an “infamous ?aming notebook”—a computer whose battery exploded and caught ?re rather spectacularly, pictures of which had sped around the internet (leading to a recall that also hit other computer manufacturers). He brought in other executives to be answerable to customers for ecommerce, product design, and, yes, customer service. The company dispatched staff to read blogs and comment on them. Later it enabled customers to rate and review products—positively and negatively— on Dell’s site. Dell was listening and it was speaking in a new and credible human voice. In February 2007, Michael Dell ordered the launch of IdeaStorm, a site where customers could tell Dell what to do, discussing and voting on the community’s favorite ideas. There the company not only listened but acted. Customers wanted Dell to make computers for consumers with the open Linux operating system instead of Microsoft Windows. Dell’s people fretted about problems that could arise if they installed one ?avor of Linux versus another, but customers told them which way to go. Dell worried about supporting the new operating system, but customers said there was
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a community in place to handle that. Today, Dell sells Linux computers. In a later interview, Michael Dell acknowledged that selling Linux machines might not be a huge business, but it was an important symbolic act, the mark of a new partnership between company and customer. I don’t mean to take credit for Dell’s transformation, only to note that Dell was now doing everything I had suggested in my open letter: reading and reaching out to bloggers, blogging itself, enabling customers to tell the company what to do, and doing it. So I had to give Dell credit: It was on the right road. Dell had joined the conversation. The following April, I met Dell blogger Menchaca, who’d read on my blog that I was headed to Austin, in Dell’s backyard, for a conference. He invited me out for beer with colleagues. On the way to the bar, Menchaca called his mother and told her that he was going to meet that blogger, Jeff Jarvis. Her response: “Are you sure you’re going to be all right, dear?” My reputation had preceded me. But the Dell team came unarmed, as did I, and they convinced me that they had learned from the blogstorm around them and were using it to build a new relationship with their customers. In the fall of 2007, I went to Dell headquarters in Round Rock, Texas, to interview Michael Dell for BusinessWeek and hear the company’s turnaround story. As we sat down to talk, Dell wasn’t exactly warm—that may just be the way he is (it’s a CEO thing) or the problem could have been me (after all, I was the guy who’d raised hell). He began: “We screwed up, right?” He followed that confession with CEO bromides: “You gotta go back to the root cause and how to solve these things so they don’t occur.” But eventually, Dell started to sound like a blogger himself. He might as well have had my ?rst law etched in brass on his desk. “There are lots of lessons here for companies,” he told me. “The simple way to think about it is, these conversations are going to occur whether you like it or not. OK? Well, do you want to be part of that, or not? My argument is, you absolutely do. You can learn from that. . . . And you can be a better company by listening and being involved in that conversation.” Of course, the company did more than blog to get itself out of trouble. Dell spent $150 million in 2007 bee?ng up its justi?ably maligned customer-support call centers. Dick Hunter, former head of manufacturing, left retirement to head customer service and brought a factory-?oor zeal for management and measurement to the task. The company had been
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judging phone-center employees on their “handle time” per call, but Hunter realized this metric only motivated them to transfer callers, getting rid of complaining customers and making them someone else’s problem. Customers stood a 45 percent chance of being transferred; Hunter reduced that to 18 percent. More frightening, 7,000 of Dell’s 400,000 customers calling each week suffered transfers seven times or more. Instead of tracking “handle time,” Hunter began to measure the minutes per resolution of a problem. Resolution in one call became the goal. He began a pilot program to reach out to 5,000 selected New Yorkers (if you can make it there . . . ) before they had problems, hoping to replace brothers-in-law as their trusted advisers with a Dell expert. He insisted Dell could have direct relationships with at least half its 20 million customers. At the same time, technicians were reaching out to bloggers to ?x problems. More and more, I saw bloggers post amazed reactions when a published complaint led to contact from Dell and a solution. Adam Kalsey blogged about his problems reinstalling Microsoft’s operating system in an old Dell machine and got immediate comment online from Brad, a Dell customer advocate, who ?xed everything. Kalsey then blogged: “I’d heard from Jeff Jarvis that Dell was working hard to reverse their image of poor customer service. It’s obvious that they’re really trying to go the extra mile. . . . A year ago I recommended that a consulting client not buy Dell hardware (they did anyway). Now I couldn’t imagine recommending anything else. Great work Dell and Brad.” Group hug. I asked the Dell team whether this approach was efficient, ?xing problems one blog kvetch at a time. They insisted yes. When bloggers explained their problems, technicians could get right to the issue. Both the customer and the company saved time and money on the phone. Dell’s online PR turned around. After starting the program, by Dell’s calculations, negative blog buzz dropped from 49 percent to 22 percent. That is, half the blog posts mentioning Dell had been negative before the outreach began; afterwards, only about a ?fth of them were. There are many lessons to be gleaned from Dell’s saga: the danger of a mob forming around you in an instant if you treat your customers badly, the need to listen to and trust your customers, the bene?ts of collaborating with them, their generosity as a basis of a new relationship—all topics we will return to in subsequent chapters. But the primary lesson of Dell’s
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story is this: Though we in business have said for years that the customer knows best and that the customer is boss, now we have to mean it. The customer is in control. If the customer isn’t in control, there’ll be hell to pay.
Your worst customer is your best friend
Now let’s live out your worst nightmare—the day a blogstorm hits you— and see what you can learn from Dell to survive the crisis and emerge the better for it, having built a new relationship with your customers and the public. Start at Google. Go there now, search for yourself—your company, your brands, even your own name—and ?nd out what people are saying about you. If you haven’t done it already, perform the same search at blog search engines Technorati, Icerocket, and Blogpulse, plus YouTube, Twitter (a blogging platform for short messages) and Facebook (where you may ?nd groups formed for or against your company). Now respond to people. Don’t rely on an intern or a PR company to make the search and the contact. Do it yourself. Be yourself. Find someone who has a problem. Find out more about the problem by engaging in conversation. Solve it. Learn from it. Then tell people what you learned. You might have had such exchanges over the years via letters, phone calls, and underlings. But now the conversation will occur in public, as will your education. Don’t be frightened. That’s a good thing. Let’s say you ?nd a customer—call him Angry Jim—who had a problem with your product—call it your eWidget. Jim writes on his blog that he got a lemon and shoddy service. He couldn’t return it. The warranty was no help. He says in choice language that you don’t give a damn about your customers. Imagine all that Angry Jim could do online. He could complain on his blog and then start a site devoted to your problems—call it f Wm. As soon as he posts, a countdown starts as he and his readers wonder how long it will take you to notice and act. Jim may share the record of his interaction with your company, chronicling every phone call—including a log of hold time and what it cost him—and every automated, form-letter email. He can post audio of the calls, complete with repeated recorded reminders that his business matters to you. To spread his word, he will
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leave comments on related blogs and message boards and in Amazon reviews. He might make a YouTube video mashing up an eWidget commercial with his own message and jingle. If it’s funny, it will spread. He can publish automated lists of other sites that are linking to him; this serves to gather his mob. Next, Jim could mobilize his fellow victims to take pictures of their busted widgets for Flickr. They could form a Facebook group devoted to complaining about eWidgets. When Jim ?nds an audience, his f Wm will rise on Google search results for eWidget. He’s now competing to de?ne your brand. It can’t get worse but it does when a reporter calls asking about f Wm. Even if you don’t listen to the conversation about you, reporters and competitors will. If you didn’t think the problem was in the public before, you can be sure it will be now. So what do you do? Run? Hide? Curse the lout? Sue him? Up your ad spending? Hire PR companies to just do something about this mess? Wait for it to go away? Look up your golden-parachute clause? You could try all that, but it won’t do any good, not anymore. Your customers know where you are; you can’t hide from them. Everything you and your employees do is being watched and made public in an instant. You have one chance to do the right thing, to rescue yourself. What will you do? If I were you, I’d email Jim. Yes, he said nasty things about your widget. You may think he’s an unreasonable complainer. You may fear that everything you say can and will be used against you in the court of public opinion (and you’d be right). You hate the idea of not being in control of this conversation. But remember: When you hand over control, you start winning. Tell Jim that you want to understand the problem and ?x it and that you’re grateful for his help. He is helping you. He could just as easily have deserted you as a customer. Instead, he’s telling you what went wrong and how to ?x it. Keep in mind that if your employees had listened, things wouldn’t have gotten this far. It escalated because Jim found himself talking to a brick wall with your brand on it. He wants to like your product; that’s the reason he bought it. I’d draw as much knowledge, experience, and perspective out of customer Jim as I could—both because you will learn and because he will note that you are listening. Finally, I would encourage him to blog about the conversation and make it public (you won’t have to invite him). Oh, and FedEx him a few new eWidgets for free. Now comes the hard part. You have a company and a culture that are
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broken or this blogstorm would not have built up. Nobody gave a damn about your new buddy Jim, which really means that they didn’t protect your reputation, brand, and business. I would call in all your C-people and project Jim’s blog on the screen. Some execs will quibble with Jim: He voided his warranty; he called when it’s the middle of the night in India; he didn’t read the instructions; he’s a complainer. But if Jim were a lone whiner, no mob would have gathered around him. His message rang true to too many customers. Some executives will rely on re?exes: hiring consultants, making media appearances, updating the web site. Ignore them. It’s time for new ways. Start by having your executives make the same searches you did, assigning their best people—nicest, most knowledgeable, most open—to solve every problem they ?nd: repair, replace, or refund, whatever the customer wants. The cost is sure to be lower than the PR damage that could occur should the storm grow. Next, I suggest you start a blog, where you openly and forthrightly share the problem and the solutions as they occur. I see no reason why a CEO should not open a direct conversation with the public. What’s to fear from your own customers? Having set that example, the CEO can expect other executives and employees down the ranks to enter into the same conversation and learn from it. That will do more to change the culture—to ?nally make it customer-focused and mean it—than a dozen consultants, a hundred off-sites, or a million ad impressions. Oh, and in that ?rst blog post, don’t forget to thank Jim.
Your best customer is your partner
Jim, no longer angry, will tell his blog friends about your turnaround. Having been heard, he will share more ideas about improving your products and company. Jim cares. He’s not the enemy. He’s a customer, even an advocate. Jim is your friend. Now the challenge—and opportunity—is to open the door to many Jims. The complementary challenge is to reorganize and reorient every division of the company—design, production, marketing, sales, customer support—around this new relationship with the people you used to call consumers but now should transform into partners. Handing this new relationship over to one department—just customer service or PR or marketing—will not work. Outsourcing it to some crisis-
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management PR company or ad agency will make matters even worse. You have to transform your relationship with your public in every quarter of the organization. This new relationship—this partnership—should take over business-to-business companies, political campaigns, government agencies, universities, charities, any institution or enterprise. To start, follow Dell’s leads: blog, interact with bloggers, enable customers to critique your products, enable them to share ideas. Next, involve them in the genesis of your products, even your design process (an idea we will return to later in the chapter, “The Googlemobile”). In this hypothetical, why not take the next design of the eWidget—eWidget 2.0, of course—and make it public? Put it all out there: research, service reports, needs, design concepts, sketches, speci?cations, and new ideas. Go ahead, try it. The product is already in trouble. What could it hurt? I suppose your detractors and competitors might say that the eWidget is in such trouble, it means you’re desperate. But that won’t happen if your customers join the process with you, add value to the product, and take ownership of it. Then you’ll get the last laugh. You may extend this new relationship in many ways, such as inviting your customers to provide support, even marketing, and perhaps enabling customers to use your company as a platform to build their own companies. Through the rest of this book, we will return to the theme of this chapter—relationships—often. That is because the single greatest transformative power of the internet and Google has little to do with technology or media or even business. It’s about people and making new connections among them. It all comes back to relationships.
New Architecture
The link changes everything Do what you do best and link to the rest Join a network Be a platform Think distributed
The link changes everything
On the morning of September 11, 2001, I was on the last train into the World Trade Center from New Jersey, arriving just as the ?rst of the terrorists’ jets hit the north tower. Though I hadn’t worked as a reporter for years, I was still a journalist and worked for a news company, so I decided to stay at what was clearly a big story—I didn’t yet realize how big or how dangerous. I gathered notes on the scene and talked with survivors, calling my reports into my employer’s news sites and newspapers. An hour later, I stood about a block from the edge of the World Trade Center site as the south tower collapsed. The cloud of destruction outran me. Blinded by the debris and covered in it, I was blessed to ?nd refuge in a bank building. I then made my way on foot to Times Square, where I wrote my news story and ?nally, thank God, found my way home. The next day, I had more to say about what I had seen and felt and the news around it, so I decided to start a blog. I had read blogs. I had also arranged my employer’s investment in the company that started Blogger and popularized the form (it was bought by Google in 2003). I hadn’t blogged myself, because I thought I had nothing to say. After 9/11, I did. So I planned to write the blog for a few weeks, until I ran out of memories. But after writing my ?rst posts, I learned a lesson that would change forever my view of media and my career; it would eventually lead to this
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book. A few bloggers in Los Angeles read what I had written, wrote about it on their blogs, and linked to me. I responded and linked to them. At that moment, a gong clanged over my head. I realized we were having a conversation—a distributed conversation, happening in different places at different times, which was made possible by the link. Soon enough, through Google’s search, I could ?nd other threads of the discussion around 9/11 and what I was writing. I saw a new structure of media: twoway and collaborative. I realized that this structure would rede?ne commerce, marketing, politics, government, education—the world. The link and search created the means to ?nd anything and connect anyone. Now everyone could speak and all could hear. It enabled people to organize around any interest, task, need, market, or cause. The link and search started a revolution, and the revolution had only just begun. Meg Hourihan, one of the creators of Blogger, wrote a groundbreaking essay in 2002, explaining the building blocks of this new system. (You can ?nd it by searching Google for the title, “What We’re Doing When We Blog.”) Hourihan argued that the atomic unit of media online was no longer the publication or the page, with their old-media presumptions, but the blog post, which usually contains a discrete idea. Each post has a permalink, an address where it should be found forever so it can be linked to from anywhere. Hourihan realized that the permalink was both a means of organizing information and a way to build social networks on top of our distributed conversations. That is what happened when those bloggers in Los Angeles linked to my posts. We had a conversation, became friends, and even ended up doing business together. Our links connected us. “As with free speech itself,” Hourihan wrote, “what we say isn’t as important as the system that enables us to say it.” This system requires that everything about you, your product, your business, and your message has a place online with a permanent address so people can search and ?nd you, then point to you, respond to you, and even distribute what you have to say. More than a home page, it’s a home for every bit of what you do. Through what you put online, you will join with other people—friends, customers, constituents—in networks made possible by links, networks built on platforms such as Blogger and Google. You can now connect with people directly, without middlemen. The link and search are simple to use, but their impact is profound.
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Do what you do best and link to the rest
The link changes every business and institution. It’s easiest to illustrate its impact on news. If the news business were invented today, post-link, everything about it—how news is gathered and shared and even how a story is structured—would be different. For example, in print, reporters are taught to include a background paragraph that sums up all that came before this article, just in case a reader missed something. But online, reporters can link to history rather than repeat it, because one reader might need to know more than a paragraph could impart whereas another reader, already informed, may not want to waste time on repetition. There are more uses of the link. When quoting from an interview, shouldn’t a story link to the transcript or to the subject’s site? If another news organization gets the only picture of a news event, shouldn’t readers expect a complete story to link to it? The link changes the structure and economics of a news organization. Every paper doesn’t need its own golf writer when it’s easier and cheaper to link to better tournament coverage at sports sites—freeing up resources that could be better used locally. Every paper doesn’t need a local movie critic when movies are national and we are all critics. Papers should not devote resources to the commodi?ed news we already know. They need to ?nd new efficiencies, thanks to the link. The link changes the structure of the industry. If a paper is going to stand out—if it wants people to ?nd its content via search and links—then it needs to create stories with unique value. If they are to survive, newspapers must concentrate their resources where they matter, sending readers to others for the rest of the news. In short: Do what you do best and link to the rest. Outside of media, retailers should link to manufacturers for product information. Manufacturers should link to customers who are talking about their products. Authors should link to experts (if only books enabled links). Headhunters, conferences, industry associations, and universities should use links to connect people who share needs, knowledge, and interests. For almost every industry and institution, the link forces specialization. The notion of providing a one-size-?ts-all product that does everything for everyone is a vestige of an era of isolation. Back then, Texans
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couldn’t get the news directly from The New York Times, the Guardian, or the BBC, but today they can. Chicagoans couldn’t buy great hot sauce in the local A&P, but now they can go online and buy it from HotSauce. com. These same pressures of specialization have killed generalist department stores—?rst with niche competitors in the mall and now with highly targeted retailers online. Serving masses, as we’ll explore, is no longer the be all and end all of business. Serving targeted masses of niches—as Google does—is the future. The specialization brought on by the link fosters collaboration—I’ll do what I do and you’ll ?ll in my blanks. It creates new opportunities to curate—when there are hundreds of lighting stores online or a thousand sites about Paris, there’s a need for someone to organize them, linking to the best. And specialization creates a demand for quality—if you’re going to concentrate on one market or service, you’d better be the best so people link to you, you rise in Google search results, and people can ?nd and click on you. In retail, media, education, government, and health—everything—the link drives specialization, quality, and collaboration, and it changes old roles and creates new ones. The link changes the fundamental architecture of societies and industries the way steel girders and rails changed how cities and nations were built and how they operated. Google makes links work. Google is the U.S. Steel of our age.
Join a network
Industries and institutions, in their most messianic moments, tend to view the internet in their own image: Retailers think of the internet as a store—a catalog and a checkout. Marketers see it as their means to deliver a brand message. Media companies see it as a medium, assuming that online is about content and distribution. Politicians think it is conduit for their campaign messages and fundraising (and a new way to deliver junk mail). Cable and phone companies hope the internet is just their next pipe to own. They all want to control the internet because that is how they view their worlds. Listen to the rhetoric of corporate value: Companies own customers, control distribution, make exclusive deals, lock out competitors, keep trade secrets. The internet explodes all those points of control. It abhors
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centralization. It loves sea level and tears down barriers to entry. It despises secrecy and rewards openness. It favors collaboration over ownership. The once-powerful approach the internet with dread when they realize they cannot control it. The internet adds networks of links over society, connecting people with information, action, and each other. It is in those connections that value is created, efficiency is found, knowledge is grown, and relationships are formed. Every link and every click is a connection, and with every connection, a network is born or grows stronger. That’s how the internet spun its web, as the network of networks. The more connections there are, the greater the value. You’ve certainly heard the old saw of network theory: One fax machine is worth nothing as it can talk to nothing, two are worth twice as much, and connecting millions of fax machines makes each one worth exponentially more (while the economies of scale—and the market for overpriced ink cartridges—also make each one cheaper to buy). The network is greater than the sum of its machines, but that’s just a one-dimensional network: one machine talks to one machine one-way and once. The internet is a three-dimensional space of reciprocal links whose value multiplies with use and time. Google is the chief agent of that value creation. Google performs this alchemy via search, of course: Seek and ye shall ?nd anything you want in fractions of a second. Each time that happens—4.4 billion times a month in 2008 in the United States alone, according to Nielsen—another connection is made between a person and information or another person. Google creates a virtuous circle: The more we click on search results, the smarter Google gets; the smarter it gets, the better its results are, and the more we use Google. Google supports its economy of clicks and links with ads, which appear on sites as small as my blog and as mighty as NYTm; almost anyone can join its ad network. If Google thought like an old-media company—like, say, Time Inc. or Yahoo—it would have controlled content, built a wall around it, and tried to keep us inside. Instead, it opened up and put its ads anywhere, building an advertising network so vast and powerful that it is overtaking both the media and advertising industries even as it collaborates with and powers them online. There’s Google’s next virtuous circle: The more Google sends traffic to sites with its ads, the more money it makes; the more money those sites make, the more content they
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can create for Google to organize. Google also helps those sites by giving them content and functionality: maps, widgets, search pages, YouTube videos. Google feeds the network to make the network grow. I am surprised that old media companies have not tried to copy Google’s model—that is, creating open networks. But one new media company is building such a network. Glam is a web of women’s sites covering fashion, health, celebrity, and more. In only two years, Glam grew to be the biggest women’s brand online. As of this writing, it has more than 43 million users a month in the U.S. and more than 81 million worldwide according to comScore, surpassing the former queen of the hill, iVillage, with 18 million. iVillage, like Yahoo, operates under the old-media model: create or control content, market to bring in readers, and show them ads until they leave. Glam instead built a network of more than 600 independent sites, some created by lone bloggers, some by bigger media companies. Glam sells ads on those sites and shares revenue with them. Glam also replicates the best of the network’s content at Gm, selling ads there—at a higher rate—and sharing that revenue, too. Glam gives its member sites technology and content to make them better. It gives them traffic and they give each other traffic, pointing to sister sites in the network. The more traffic each site gets, the more traffic it has to send around—that is the network effect, another virtuous circle. Glam also gives its sites prestige, for unlike Google, it is selective. Glam’s editors ?nd sites they like and highlight the best of the content, making Glam a curated content and ad network. That allows Glam to tell skittish advertisers that their messages will appear in a quality, safe environment, and advertisers will pay more for that. There’s another big advantage to Glam’s network approach: cost. It need not hire expensive staff to create its wealth of content nor does it have to pay to license that content. At ?rst, Glam guaranteed minimum payments to some sites—an investment that amounted to paying for content to get started—but it later eliminated those guarantees. Now it is a network of mutual bene?t: The better content its sites create, the more traffic they get; the more traffic they can send around the network, the more Glam can sell ads at higher rates. Media companies should ask, WWGD? What would Glam do? To be clear: Glam’s no Google, at least not yet. It’s not pro?table and in 2008 was still taking venture capital—from, among others, the German
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publisher Burda—and investing in growth and technology. Its sites and their content can stand improvement. But I believe the model has legs and I’m no longer alone. The Guardian, Reuters, and Forbes each started blog ad networks to expand their content and advertising opportunities while their core businesses are challenged. These companies are taking a lesson from Google and its understanding of the networked architecture. I will argue later that restaurants and retail stores, certainly governments and universities, and even airlines and possibly insurance markets can operate like networks, creating more value when they create more connections in their worlds. In 2005, I joined a roundtable held by the venture-capital ?rm Union Square Ventures in New York to talk about peer production and the creation of open networks and platforms. Counterintuitive lessons swirled around the room as entrepreneurs, investors, and academics analyzed the success of companies built this way. Across the table sat Tom Evslin, the unsung hero of the web who made the internet explode when, as head of AT&T Worldnet, he set pricing for unlimited internet access at a ?at $19.95 per month, turning off the ticking clock on internet usage, lowering the cost for users, and addicting us all to the web. Evslin gave a confounding lesson on networks. Explosive web companies—Skype, eBay, craigslist, Facebook, Amazon, YouTube, Twitter, Flickr, and Google itself—don’t charge users as much as the market will bear. They charge as little as they can bear. That is how they maximize growth and value for everyone in the network. Evslin used an ad network to illustrate the value of building scale in this manner. An ad network that extracts the minimum commission it can afford out of ad sales for member sites will grow larger because more sites will join this network than its greedier competitors. Ad networks need a critical mass of audience before they can sell to top-tier advertisers, which pay higher rates. So charging less commission to grow larger can yield more ad sales at better prices. It gets even more head-scratching: Evslin argued that if the company that runs the network is too pro?table, it will attract competitors that will undercut it and steal market share. “If you’re doing well but running at or close to breakeven,” he explained later on his blog at TomEm, “you’ve made it impossible for anybody to undercut you without running at a de?cit.” To sum up Evslin’s law of networks: Extract the minimum
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value from the network so it will grow to maximum size and value—enabling its members to charge more—while keeping costs and margins low to block competitors. That’s not how many old networks operate. Cable companies wrap their wires around us to squeeze maximum fees out. Ditto for phone companies, newspapers, and retailers. Charging what the market would bear made perfect sense for them. But now they face competition from nextgeneration networks. Skype—which at the end of 2007 had 276 million accounts in 28 languages—exploded as a free service before it added paid features that drastically undercut old phone companies. Its founders pulled value out of the business when eBay bought it. eBay itself had created a new retail marketplace by extracting little from each sale. Once eBay thought it was alone at the top, though, it started raising fees—but that allowed online retail competitors Amazon and Etsy to steal away merchants. Evslin’s poster child for network growth is craigslist. It foregoes revenue for most listings in most markets—charging just for job listings and for real estate ads in a few cities—and that made it the marketplace for most listings. “If Craig now attempted to maximize revenue by charging for a substantially higher percentage of ads, a door would be cracked open for competition,” Evslin said. “There is no chance at current rates for a competitor to steal Craig’s listings (and readers) by charging less.” This is the economy in which Google operates. It had no revenue model for its ?rst few years until it happened into advertising. “Bank users, not money,” was Google vice president Marissa Mayer’s advice on building new products and networks. She said in a 2006 talk at Stanford that Google doesn’t worry about business models as it rolls out products. “We worry a lot about whether or not we have users.” That is because on the web, “money follows consumers.” At the New York roundtable, an entrepreneur quoted legendary Israeli investor Yossi Vardi, who said that when he launched the pioneering instant-messaging service ICQ (later bought by AOL), he cared only about growing. “Revenue was a distraction,” he decreed. This doctrine of growth over revenue was mangled in the web 1.0 bubble, when new companies spent too much of investors’ money on marketing so they’d look big, only to collapse when money ran out and users vanished. Today’s web 2.0 method for growth is to forgo paying for marketing and instead create
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something so great that users distribute it—it goes viral. Once it’s big, then it can ?nd the revenue. That money may not come directly from users in the form of fees or subscriptions but may come from advertising, ticket sales, merchandise sales, or from the value that is created from what the network learns—data than can be sold. I discuss such side doors for revenue later in the book. Network economics may be confounding, but networks themselves are simple. They are just connections. You already operate in many networks. Go ?nd the biggest whiteboard you can and draw your networks from various perspectives: First draw your company with all its relationships: customers, suppliers, marketers, regulators, competitors. Now draw a network from your customers’ perspective and see where you ?t in. Next draw your personal network inside and outside your company and industry. Draw your own company not as a boxy organizational chart but as a network with its many connections. In each, note where value is exchanged and captured (when you sell, you get revenue; when you talk with customers, you gain knowledge; when you meet counterparts, you make connections). Now examine how these networks can grow, how you can make more connections in each, how each connection can be more valuable for everyone. No longer see yourself as a box with one line up and a few lines down. Instead, put yourself in a cloud of connections that lights up each time a link is made, so the entire cloud keeps getting bigger, denser, and brighter—and more valuable. Then your world starts to look like Google’s.
Be a platform
Networks are built atop platforms. The internet is a platform, as is Google, as are services such as photo site Flickr, blogging service WordPm, payment service PayPal, self-publishing company Lm, and business software company Sm. A platform enables. It helps others build value. Any company can be a platform. Home Depot is a platform for contractors and Continental Airlines is a platform for book tours. Platforms help users create products, businesses, communities, and networks of their own. If it is open and collaborative, those users may in turn add value to the platforms—as IBM does when it shares the improvements it makes in the open-source Linux operating system.
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Google has many platforms: Blogger for publishing content, Google Docs and Google Calendar for office collaboration, YouTube for videos, Picasa for photos, Google Analytics to track sites’ traffic, Google Groups for communities, AdSense for revenue. Google Maps is so good that Google could have put it on the web at m and told us to come there to use it, and we would have. But Google also opened its maps so sites can embed them. A hotel can post a Google Map with directions. Suburbanites can embed maps on their blogs to point shoppers to garage sales. Google uses maps to enhance its own search and to serve relevant local ads; it is fast becoming the new Yellow Pages. Google Maps is so useful on my iPhone that I’d pay for it. In the old architecture and language of centralized, controlling businesses, Google Maps would be a product that consumers may use, generating an audience that Google could sell to advertisers. That’s if Google wanted to stay in control. Instead, Google handed over control to anyone. It opened up maps so others could build atop them. This openness has spawned no end of new applications known as “mashups.” In its June 2007 issue, Wired magazine credited Paul Rademacher, a DreamWorks animation programmer, with inventing the map mashup. In 2004, while looking for an apartment in the San Francisco area, he carried piles of printouts of craigslist ads and maps and thought—rather like the guy who ?rst smeared peanut butter on chocolate—that they should be combined. He discovered he could dig into Google’s code to put listings and maps together. After eight weeks, he had a demo that attracted thousands of users in a day. “I had no idea how big it would be. I just wanted to write something that was useful,” he said. “Microsoft and Yahoo followed suit,” Wired reported, “and before long the web was awash in map mashups.” Google didn’t sue Rademacher for messing with its product in an unauthorized manner. Google hired him. Opening Google Maps as a platform spawned not just neat applications but entire businesses. Mobile phone companies are building Google Maps into their devices, which gets maps into the hands of new customers. Pm built an elegant user interface atop Google Maps that lets users place pins at any locations, showing the world anyone’s favorite restaurants or a family’s stops on vacation. Neighbors can collaborate and create a map pinpointing all the potholes in town. That map could, in turn, be embedded on a blog or a newspaper page. News sites have used maps to
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have readers pinpoint their photos during big stories, such as ?oods in the U.K. Adrian Holovaty, a journalist/technologist—a rare breed the industry needs to clone—used Google Maps to make a news product and then a company. He took crime data from the City of Chicago and mashed it up with Google Maps, enabling residents to see every crime, by type, in any neighborhood. Because Holovaty’s work was itself open, someone else mashed up his mashup, creating a site where commuters could trace their routes home and ?nd all the crimes along the way. Holovaty folded his service, ChicagoCg, into a new business, EveryBlock, which displays all sorts of data—from crime to building permits to graffiti cleanings—on neighborhood maps. These new products and businesses were made possible because Google provided a platform. Businesses’ use of the platform helped Google set the standard in mapping and local information. That gives Google huge traf?c to its maps—tens of millions of users a month. Google invests to make maps better and better, licensing satellite pictures and hiring airplanes and cars to capture images of the ground. At the Burda DLD (Digital, Life, Design) conference in Munich in 2008, Google’s Mayer, the vice president of search products and user experience, said, “We think of our geo technologies as building a mirror onto the world.” She said Google Maps has coverage for half the world’s population and a third of its landmass. The public’s use of the maps adds yet more data, millions of bits of it. Users in Santiago, Chile, and Buenos Aires, Argentina, built the only comprehensive maps of their public-transit systems atop Google Maps. Users have also uploaded millions of geotagged photos associated with points on the maps, allowing us to get new views of places. If you have a platform, you need developers and entrepreneurs to build on it, creating more functionality and value and bringing more users. Facebook did that. The social service got a big boost in attention and users when it enabled outsiders to create new applications inside the service. Within months, Facebook—which reached 500 employees in 2008—had 200,000 developers who created 20,000 new applications for users with virtually no staff cost to the company. When the service opened its Spanish and German versions, it didn’t translate itself but created a platform for translation and handed the task over to users, who did the work for free.
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Facebook pro?ted because it expanded and users had more reasons to spend more time on the service. To do this, Facebook had to open up its infrastructure and some of its secrets to let outsiders program on its platform. By contrast, the European Union ?ned Microsoft $1.4 billion in 2008 because it failed to charge developers reasonable prices for access to its platform so they could build products on top of it. Facebook went a step farther and killed some of the applications its internal programmers had written, believing the community would do a better job making them. My son and webmaster, Jake, who was 15 at the time, programmed his version of one of the apps Facebook killed, Courses, in which students share their class schedules. Pardon a moment’s parental bragging, but his app rose to be No. 1 among its competitors—gathering information about 1.5 million classes—and he sold it to a competitor for enough to pay for a year of college. Facebook did not charge Jake or other developers a penny for access to its code or its users, nor did Facebook take a cut of the advertising revenue developers earned. It was in Facebook’s interest to help developers succeed because they helped the company grow in value. Grow it did, to the point that Microsoft made an investment in 2008 that valued Facebook at $15 billion (versus competitor MySpace’s $580 million purchase by News Corp. in 2005). I am a partner in a start-up called Daylife that created a platform to gather, analyze, organize, and distribute the world’s news. Just as it was beginning, I took the founder, Upendra Shardanand, to meet venture capitalist Fred Wilson. At the end of our meeting, Wilson asked: “Can I use your platform to build my own business? And before you answer, let me tell you, the right answer is ‘yes.’ ” Wilson sees building platforms as a strategic imperative. “In the economy we’re in now, if you’re not a platform, you’ll be commoditized,” he told me. Google will win against Microsoft and Yahoo, he argued, because too many companies have invested too much to build on Google’s platform. That will make them loyal. Questions to ask yourself: How can you act as a platform? What can others build on top of it? How can you add value? How little value can you extract? How big can the network atop your platform grow? How can the platform get better learning from users? How can you create open standards so even competitors will use and contribute to the network and you get a share of their value? It’s time to make your own virtuous circle.
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Think distributed
Most companies think centralized, and they have since the decline of the Sears catalog and the dawn of the mass market. Companies make us, the customers, come to them. They spend a fortune in marketing to attract us. We are expected to answer the siren call of advertising and trudge to their store, dealership, newsstand, or now, web site. They even think we want to come to them, that we are drawn to them, moths to the brand. Not Google. Google thinks distributed. It comes to us whenever and however it can. Google’s search box can appear on our browser or any page anywhere on the internet. If we do go to the trouble of traveling to Gm’s home page, we’re rewarded with nothing but its spare search box and perhaps the occasional seasonal gag adorning the logo—but no ads. CNBC’s Jim Cramer asked Google CEO Eric Schmidt in 2008 what the company could charge home-page sponsors. “Some number of billions of dollars,” Schmidt said. But Google won’t sell ads there because “people wouldn’t like it.” Yahoo and most other sites, on the other hand, try to make their home pages into destinations, crammed with content and advertising they believe will attract readers and serve marketers. Yet many users don’t see these home pages. As many as 80 percent of a day’s users at many news sites enter through search or links and never go to the home page. Yahoo and many internet sites think of themselves as an end. Google sees itself as a means. Early in Yahoo’s life, its cofounder, Jerry Yang, told me it was his job to get users in and out of Yahoo as quickly as possible. That changed when Yahoo decided to become a media company. Its new goal was to keep people inside its fence as long as possible. Years later, I heard Yang and his lieutenants brag about the “?re hose” of traffic they could bring from their home page. Like so many sites, they think the job of the home page is to take you where they want you to go. Google sees its home page as the way to get you to where you want to go. And when you get there, there’s a good chance you’ll ?nd a Google ad or application. That is where Google wants to be: wherever you are. Google distributes itself. It puts its ads on millions of web pages it does not own, earning billions of dollars for those sites and for itself. It offers scores of widgets—boxes of free, constantly updated content or functionality anyone can add to a web site or desktop: everything from weather to car-
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toons, chat to calendars, sports scores to photos, recipes to games, quotes to coupons. These widgets are ?lled with other companies’ content; Google merely created the platform to distribute it. Yahoo, AOL, and other content sites should have created such distribution platforms years ago, cutting themselves up and offering their wealth of content and functionality to others to distribute and build upon. They didn’t think that way. They didn’t think distributed. They wanted to get us to come to them. This understanding of the distributed web is what made Google buy YouTube for $1.65 billion in 2006 (though Google already had a lesser video service). YouTube grew to be the standard for video by making it easy not only to upload and play videos but also to embed—that is, to distribute— those videos on any site. My business partner, Peter Hauck, and I used this platform to build the blog Pm, which covered the 2008 U.S. presidential election through the eyes of YouTube. Google made it possible for us to create new content around its videos—promoting them—and we created a business by syndicating that content to WashingtonPm and CBSNm. At a conference of media bigwigs in London in 2007, I got into an amicable debate about Google’s model of distribution with my friend and former colleague Martin Nisenholtz, senior vice president for digital operations at The New York Times Company. I was urging the 200-plus worldwide media executives there to think like Google—that was the ?rst time I publicly suggested that we should be asking, WWGD? I advised them to follow Google’s example and distribute themselves as widely as possible, to go to where the readers are rather than make the readers come to them. Nisenholtz argued in response that some brands, such as The Times, are worth the trip to their site. He’s right. But The Times is also worth distributing. At that same conference, two brilliant consultants—Jeffrey Rayport of Harvard Business School and Andrew Heyward, former president of CBS News—advised the executives to turn their media properties “insideout,” inviting audiences in. They were half right. The problem with this formulation is that it still puts the media companies inside, at the center. That’s not how their customers think of their worlds. People draw their me-spheres with themselves at the center and everyone else—especially those who want their money—on the outside. That’s how companies and institutions should view themselves: on the outside, asking to come in.
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“We can’t expect consumers to come to us,” is how the president of CBS Interactive, Quincy Smith, put it to The Wall Street Journal. “It’s arrogant for any media company to assume that.” Smith abandoned his network’s strategy of creating a destination site where viewers would come to see its shows. He joked that the address for that failed portal should have been “CBS.com/nobodycomeshere.” In its place, Smith developed a strategy built around the audience as the network, placing shows on as many sites and platforms as possible, making them embeddable, and hoping that people would distribute them farther. So far, it’s working. Enabling embedding gives networks something better than distribution. It gives them recommendations. If I put a clip of Jon Stewart’s Daily Show on my blog, I’m recommending that you watch it. Even if I criticize the show, I’m saying there’s something here worth seeing and discussing. You can watch it right then and there, without having to seek out Comedy Cm. Such audience network strategies make viewers both distributors and marketers and get content into the wider conversation. When it works, viral distribution by the public can be more effective and certainly a lot cheaper than marketing to attract an audience. The audience can also sell. In BarnesAndNm’s affiliate program, anyone can become a bookseller on a blog by adding a widget that recommends titles. If readers buy, the blogger earns a commission of 6 percent. It’s no way to get rich but it does provide one more motivation for customers to become distributors and marketers. Bookstores are not alone. Search Google for any of many categories followed by the words “affiliate program” and you’ll be surprised at the thousands that are happy to share revenue for selling gifts, ?owers, shoes, insurance, Bibles, and, of course, porn. Retail, like search and content, can think distributed. Newspaper classi?eds were once the epitome of a centralized marketplace: You had to go to the paper to sell or buy a car or a home or ?nd a job or an employee because that’s where everyone did business. There was no other way for buyer and seller to ?nd each other. Then came the internet and craigslist, whose founder, Craig Newmark, is blamed for sucking billions of dollars out of the newspaper industry. That’s unfair. He simply created a tool that makes markets more efficient, leaving billions in the pockets of those doing the transactions. If Craig hadn’t done it, someone else would have (no doubt Google wishes it had). craigslist is itself centralized. It’s just a less expensive and more efficient marketplace. It’s possible
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that more distributed solutions could supplant its database (though not its community). Specialized search engines such as SimplyHm, Im, and Om can aggregate every job posting and résumé around the web. The craigslist advantage, again, is that it does not charge what the market will bear—instead, as little as it will bear—and it has a loyal community. I’m not arguing that everything online should stay distributed. When little bits of information and commerce spread out everywhere, they become hard to ?nd. There is a need to aggregate them again—and a business opportunity there. Google News and Daylife (where I work) collect and organize headlines from all over the web so we can ?nd all the latest news from anywhere. Some newspapers object to being aggregated. I believe papers should beg to be aggregated so more readers will discover their content. Daylife has taken headlines and put them in pages and widgets that sites can, in turn, distribute again. This pattern of distribution and aggregation is the yin-yang, push-pull of the distributed web: You want to be distributed, then aggregated, and then distributed again. You want to be found.
New Publicness
If you’re not searchable, you won’t be found Everybody needs Googlejuice Life is public, so is business Your customers are your ad agency
If you’re not searchable, you won’t be found
Once upon a time, all roads led to Rome. Today, all roads lead from Google. Google de?nes what your web presence should be. Of course, you need a web site. Who doesn’t? But don’t look at your site as a place where you get your message across. Don’t obsess on a fancy home page and a path of navigation you want users to take (and please don’t play music when I get there). Remember that many or most people won’t see that home page. Most will likely come to you through Google after they ask a question. The question is: Will you have the answer? That’s how you should think of your site: answers for every question you can imagine, each on a page that is clearly and simply laid out so both Google and busy readers can ?nd it and ?gure it out in an instant. If you’re a manufacturer, customers should be able to ?nd product details and support in an instant. If you’re a politician, voters want to know your stands and record. If you’re a food company, buyers want nutritional information. If you’re a clothing company, shoppers want you to give the information a good sales clerk would—does this run large? Where can I buy your product? How do I contact you? Your users are already telling you what they want to know. Have your web folks show you the searches people made in Google when they clicked on a link to come to you. That is your starting list of questions to answer.
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I learned about watching Google queries from Am, the ?rst media company made for the Google age. A vast majority of its traffic comes from Google. A large proportion of its ad revenue also comes from Google. Am might as well be a division of Google, but it’s not. It’s merely built on Google’s platform. Am is owned by The New York Times Company, which bought it in 2005 for $410 million (and hired me to consult there). I’ll confess I was dubious about the acquisition when it occurred, but I was wrong. Today, as papers struggle in the new economy, Am is one of the rare bright spots in any newspaper company’s P&L. Am at ?rst wanted to compete with Google or even to be Google. Started by Scott Kurnit as The Mining Company in 1997—a year before Google was incorporated—its goal was to provide a humanpowered guide to the internet. But as Yahoo also learned, that was hard and expensive, especially as the internet grew so unfathomably large. The company was rechristened Am and became a content service with 700 sites maintained by independent writers and more than a million helpful, focused, and usually timeless articles about niche topics from car repair to thyroid disease. All these articles are structured so Google will ?nd them easily. Am works hard to make itself Google-ready. Writers are taught search-engine optimization (SEO)—how to craft headlines, leads, page titles, and text around keywords so Google will recognize what each article is about. Writers are also taught to monitor search queries. If users are asking questions for which Am doesn’t have answers, they write articles with those answers. Keeping an eye on search terms is a preemptive readership survey, except instead of asking what people have read, Am ?nds out what they want to read. Am’s search-engine-optimization wizardry in?ltrated its corporate sibling, The New York Times, where editors began to rewrite newspaper headlines for the web so Google’s computers would understand them better and send more traffic to them. (For instance, the headline on a book review in the print Times may be clever but indecipherable unless you see the accompanying photo of the book cover and captions; online, the proper headline should include the title and author so anyone searching on either will ?nd the review.) The Times also creates content aimed in part at pleasing Google: permanent topic pages on newsmakers and companies,
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which the paper hopes will become resources people will click on and link to over time, helping these pages rise in Google results, bringing in more traffic. Google was also a key reason why The Times changed its digital business model and stopped charging for content online (which I’ll address in the chapter, “Free is a business model”). The most important bene?t The Times received by opening up: Googlejuice.
Everybody needs Googlejuice
Googlejuice? That’s the magic elixir you drink when Google values you more because the world values you more. It’s another virtuous circle: The more links, clicks, and mentions you get, the higher you rise in Google’s search results, offering you the potential for yet more clicks. The rich get richer, the Googley Googlier. I wonder whether, someday, companies will come to be valued not only on their revenue, marketshare, EBITDA, and pro?t but also on their Googlejuice. The bene?ts of Googlejuice are lost on companies that do not make their information searchable—from local businesses that don’t have sites to stores that don’t post sales to manufacturers that don’t publish product details to magazines that put content online in overcomplicated designs and databases that Google can’t read. The bene?ts of search are also lost on a few media companies that resent Google and think they are punishing the big, bad beast by hiding from it. They’re cutting off their noses to spite their faces. Various European papers have argued that Google and Google News are making money off their content and so they have demanded that Google stop searching their sites (which is easy for a site to do; just add a snippet of code to any web page to tell robots and spiders— the programs that crawl the web for search engines—to stay away). Blocking Google only means that it will stop sending readers, which is nothing short of suicide. That’s like newspapers saying to a newsstand operator, “How dare you make a penny distributing my product? Give my papers back or I’ll sue!” Google is their new newsstand. It’s insane to treat Google as the enemy. Even Yahoo doesn’t (it asked Google to sell its ads). The goal today is to be Google’s friend or at least, as adman Sir Martin Sorrell of WPP has dubbed Google, your “frenemy.” The way to befriend and to exploit Google is to be searchable.
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The way to become Google’s enemy is to game and spam its search results. Evildoers will try to corrupt Google’s algorithms to award their sleazy clients fraudulent Googlejuice. Some use automated software to create spam blogs—“splogs”—that carry fake content with lots of links to their clients, trying to trick Google into indexing and valuing all those links. Other companies use humans to do this dirty work, hoping to fake Google out and make it harder to ferret out the frauds. Some spammers pay people in poor nations pennies to create splog sites. And some companies hire bloggers to write nice things about their clients when, in reality, what they write is nothing any person would want to read. These often-unsuspecting bloggers are just creating more splog links to help give the bad guys more Googlejuice. It’s insidious. Sadly, Google isn’t always as diligent as it should be in cutting off the sploggers. Those pages also carry Google ads, which earn Google money. What’s good for big companies such as Am is good for any small company or organization—or person. We all want to be found on Google. We all want Googlejuice. Customers now expect any information in the world to be available with one click. So every restaurant should have its menu, specials, hours, address, and more online. On a recent vacation, researching restaurants for the family, I went only to places that had web sites; I ?gured the others just didn’t care enough. Not having an up-to-date web presence that Google can crawl and search and then present to users is like not having a phone number or a sign over the door. Today, that’s particularly so because it’s so easy to be on the web. The age of the geeky web priesthood is over. That restaurant can post its specials every day with a free weblog tool such as Blogger—which comes from Google. It can attract customers by buying ads on sites shown to people in the area—with Google. It can list itself on Google Maps and buy ads there, too. The same can be said of you as an individual. You need a search presence. Your résumé should be online, because you never know when a job might come by. When you sell your house or car or golf clubs, you’ll want them to be where they can be searched and found. As we’ll discuss at the end of the book, without a Google shadow, old friends (and girlfriends and boyfriends) will never ?nd you. Today, if you can’t be found in Google, you might as well not exist.
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How can you be sure to be found on Google? A new industry has emerged around just that need. Convention ?oors are ?lled with searchengine optimization companies promising to help you get to the promised land: the essential ?rst page of search results for a topic relevant to what you do. Plenty of books and consultants can take you through all the technical details of searchability. I don’t pretend to be a wizard of SEO, but there are a number of simple and obvious rules for how to think of your internet presence. ? Make sure every possible bit of information that anyone could want to know about you is on the web, searchable by Google. ? Construct information on pages so it can be understood by machine and man. In a word, be clear. If you’re a dentist, say you’re a dentist, not a smile doctor. Use the word “dentist” in the title of the page, the headline, and the beginning of what you write—make it so obvious even a computer couldn’t be confused. This also means that when human beings come to the page, they’ll know what you do. Clarity is always bene?cial. ? Don’t use fancy technology to make the content on your page dance and sing. Google won’t recognize much of it (and readers will be irritated). Keep it simple. ? Don’t bury your content inside fancy content management systems that stow it away in databases Google can’t get to. ? Give everything you publish a permanent address—a permalink— so it can attract and accumulate more traffic and links and so Google has a place to which it can reliably send the people looking for you. ? Create separate pages for separate topics. If you’re a restaurant, have a menu page and a directions page so, when I go searching for “Jeff ’s Chop House menu,” Google can send me straight to your menu page. ? If there’s any possible reason why anyone elsewhere on the web would want to link to you, make it easy for them to do so. If there
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are sites and bloggers writing about restaurants in your town, make them aware of your site. Google will notice their links, giving you a few more precious drops of Googlejuice. ? Once people come to your page, make sure you make it clear where they are: Put your brand on every page. When people go looking for an answer and ?nd it via a click from a Google search, they often don’t know where they have landed and who gave them their answer. Take credit.
Life is public, so is business
When the photo service Flickr started, its husband-and-wife founders, Caterina Fake and Stewart Butter?eld, made a fateful if almost accidental decision. As Fake puts it, they “defaulted to public.” That is, while other online photo services made the assumption that users would want to keep personal pictures private—stands to reason, no?—Flickr decided instead to make photos public unless told otherwise. Amazing things happened. People commented on each other’s photos. Communities formed around them. They tagged their photos so they could be found in searches because they wanted their pictures to be seen. They contributed more photos because they were seen. And as I will explain later, their usage of photos helped interesting ones to bubble up, which was possible only because they were all public. Fake calls this condition “publicness,” which is becoming a key attribute of society and life in the Google age. I believe publicness is also becoming a key attribute of successful business. We now live and do business in glass houses (and offices), and that’s not necessarily bad. Publicness is about more than having a web site. It’s about taking actions in public so people can see what you do and react to it, make suggestions, and tell their friends. Living in public today is a matter of enlightened self-interest. You have to be public to be found. Every time you decide not to make something public, you create the risk of a customer not ?nding you or not trusting you because you’re keeping secrets. Publicness is also an ethic. The more public you are, the easier you can be found, the more opportunities you have.
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Your customers are your ad agency
For more than a century, the public face of companies has been their advertising, slogans, brands, and logos. How much better it would be if a company’s public face were that of its public, its satis?ed customers who are willing to share their satisfaction, and its employees who have direct relationships with customers. Brands are people. If that’s the ideal, then here’s the goal: Eliminate advertising. Or at least ?re your ad agency. Oh, you won’t get rid of advertising entirely. You should be so lucky. But every time a customer recommends you and your product to a friend is a time when you don’t have to market to that friend. It is possible today to think that one good word can spread as far as an ad would. This scenario is not hypothetical. When I had my problems with Dell, I could see them losing sales as people came to my blog and left comments saying they’d just decided not to buy a Dell, often adding that they’d told their friends their vow as well. There’s no telling how much one pissed-off customer costs you today. The contrary is also true. A happy customer can sell your products. Now that bloggers are praising Dell online, new sales accrue as customers reconsider the company. When Dell started offering discounts to users of Twitter, who passed the word to more users, the company added $500,000 in sales in no time. The more your customers take ownership of your brand, the less you will spend annoying people with your ads. I can hear your agency: You can’t hand messaging over to the people; they’ll be off-message. Well, tell your agency their message may be off. Your customers have always owned your brand. Advertising is your last priority, your last resort, an unfortunate byproduct of not having enough friends . . . yet. Learn this lesson from Google, which spends next to nothing on advertising. It became the fastest growing company in the history of the world without marketing. It grew thanks to its friends, not through ads. In its “10 things Google has found to be true,” the company says its “growth has come not through TV ad campaigns but through word of mouth from one satis?ed user to another.” The generation that has that damned “Yahoo-ooo” sound stuck in their heads thanks to untold millions spent on commercials is the same generation that used and spread Google instead, for free.
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Of course, Google’s lucky. It created a spectacular product that solved a problem at just the right time, becoming essential to the internet and growing as it did with no limits on its scale. People need Google. They love Google. You may not be so lucky; you may be stuck selling a product that doesn’t change the world in a market that’s old and competitive. Sorry. But you may have great customer service and that’s what people talk about. “Customer service is the new marketing,” venture capitalist Brad Burnham blogged after having lunch with the best-known customerservice rep anywhere, Craig Newmark of craigslist. That law gained momentum as the title of a conference in 2008 held by GetSm, a company that created a platform for any customer to get help with any company. “Listening to our customers is actually the most perfect form of marketing you could have,” said Mark Jarvis (no relation), chief marketing officer of Dell. Even if you don’t have a product to love, you can still have a company worth admiring. Alloy Media surveyed college students in 2008 and found that 41 percent preferred socially responsible brands, a 24 percent increase in two years. Maybe that’s why your customers will talk about you. Once more, it comes down to relationships—relationships that are lived in public. Every time someone says something good about you online because of your product, service, reputation, honesty, openness, or helpfulness, you should knock another dollar off your advertising budget. Will it ever get to zero? Only if you’re lucky.
New Society
Elegant organization
Elegant organization
I sat, dumbfounded, in an audience of executives at the annual meeting of the World Economic Forum International Media Council in Davos, Switzerland, as the head of a powerful news organization begged young Mark Zuckerberg, founder of Facebook, for his secret. Please, the publisher beseeched him, how can my publication start a community like yours? We should own a community, shouldn’t we? Tell us how. Zuckerberg, 22 at the time, is a geek of few words. Some assume his laconicism is a sign of arrogance—that and his habit of wearing sandals at big business conferences. But it’s not. He’s shy. He’s direct. He’s a geek, and this is how geeks are. Better get used to it. When the geeks take over the world—and they will—a few blunt words and then a silent stare will become a societal norm. But Zuckerberg is brilliant and accomplished, and so his few words are worth waiting for. After this publishing titan pleaded for advice about how to build his own community, Zuckerberg’s reply was, in full: “You can’t.” Full stop. Hard stare. He later offered more advice. He told the assembled media moguls that they were asking the wrong question. You don’t start communities, he said. Communities already exist. They’re already doing what they want to do. The question you should ask is how you can help them do that better. His prescription: Bring them “elegant organization.” Let that sip of rhetorical cabernet roll around on the palate for a minute. Elegant organization. When you think about it, that is precisely what Zuckerberg brought to Harvard—then other universities, then the rest of
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the world—with his social platform. Harvard’s community had been doing what it wanted to do for more than three centuries before Zuckerberg came along. He just helped them do it better. Facebook enabled people to organize their social networks—the social graph, he calls it: who they are, what they do, who they know, and, not unimportantly, what they look like. It was an instant hit because it met a need. It organized social life at Harvard. At this Davos meeting (which was off the record, but Zuckerberg gave me permission to blog it), he told the story of his Harvard art course. Zuckerberg didn’t have time to attend a single class or to study. After all, he was busy founding a $15 billion company. The ?nal exam was a week away and he was in a panic. It’s one thing to drop out of Harvard to start a gigantic, world-changing company; it’s another to ?unk. Zuckerberg did what comes naturally to a native of the web. He went to the internet and downloaded images of all the pieces of art he knew would be covered in the exam. He put them on a web page and added blank boxes under each. Then he emailed the address of this page to his classmates, telling them he’d just put up a study guide. Think Tom Sawyer’s fence. The class dutifully came along and ?lled in the blanks with the essential knowledge about each piece of art, editing each other as they went, collaborating to get it just right. This being Harvard, they did a good job of it. You can predict the punch line: Zuckerberg aced the exam. But here’s the real kicker: The professor said the class as a whole got better grades than usual. They captured the wisdom of their crowd and helped each other. Zuckerberg had created the means for the class to collaborate. He brought them elegant organization. Look at your constituents, customers, community, audience—even your competitors—and ask how you can bring them elegant organization, especially now, as the internet disrupts everything. Where some see a new world disorder, others see the opportunity to bring organization. This strategy is the foundation for so many internet companies: Google helps us organize around search, advertising, maps, documents, and more. Its mission, after all, is nothing less than to organize the world’s information. eBay lets us organize markets for merchandise. Amazon helps us organize communities of consumer opinion around every product offered there. Facebook and other services like it—LinkedIn (big in business), Bebo
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(big in Europe), Google’s Orkut (big in Brazil and India), and StudieVZ (big in Germany)—help us to organize our friends and colleagues. Skype, AOL, and Yahoo give us the tools to collaborate through chat, phone, and video, organizing our communication. Flickr lets us organize our photos and also communities of interest around them. does the same for our bookmarks and web recommendations. Daylife organizes the world’s news. BlogAds lets bloggers organize ad networks. Wikipedia’s platform enables us to organize our collective knowledge. Dell’s support forums organize customers’ knowledge. The internet brings us so many new paths to people, information, and functionality that we need help making sense of it. We’ve long needed help organizing ourselves. Government and media did that for us. Then internet portals and online media followed their centralized worldview. But the next generation of organizational enterprises—the Facebooks, Flickrs, and Wikipedias—don’t organize us. They are platforms that help us to organize ourselves. In his book Here Comes Everybody, New York University professor Clay Shirky argues that self-organization is a key to understanding the internet’s impact on society. We can now organize without organizations. That is his law. Shirky studied the early years of Meetup, a New York company that uses internet tools to enable groups of people to get together in person. Its founder, Scott Heiferman, was inspired by Robert Putnam’s book Bowling Alone, which argues that our communities are unraveling as we become more disconnected. Heiferman wanted to ?x that by enabling groups to come together. “Use the internet to get off the internet,” Meetup’s home page urges. Where others saw disorder, Heiferman saw opportunity. In Shirky’s examination of Meetup’s ?rst year, he learned that the groups that organized were not what you’d expect. The most popular? Not soccer moms or football fans or knitting circles but witches. Yes, witches. With re?ection, this makes sense. Witches have so few ways to organize covens or coffee klatches. Meetup helped them do that. When I ran newspaper sites, I tried to provide organization for communities with forum discussions and web-page tools, but I made the mistake of acting like a portal or media gateway: I decided what those communities were—parents, residents of a county, cooks. I thought I knew. If instead I had provided an open platform, who knows how many witches would have gathered in New Jersey? The key to offering elegant organization to individuals or groups—the key to all platforms—is to enable oth-
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ers to use the tool as they wish. They know their needs. Such openness and ?exibility also enables more groups to form. Each one may be small, but altogether, they add up to a larger network of groups—a mass of niches. There is an ongoing debate about who will win the social space, what company will own the social web. That’s a wrong-headed view of the opportunity. The internet already is a social network. So is life. The internet merely provides more means to make more connections. The winner is not the company that gets us to come in and be social inside a wall: the social AOL or MySpace or, for that matter, Facebook. The winner will be the one that ?gures out how to bring elegant organization to the disorganized social network that the internet already is. We are waiting for the Google of people. Zuckerberg’s stated ambition is to be that next Google. And Google is afraid that he might succeed, which is why it created a standard called Open Social and banded together with other social networks, hoping to beat Facebook at its own game. To win, Facebook needs to be more open, to look beyond its walls and ?gure out how to take its organization to the rest of our lives online. I’ll bet they will be smart enough to do it. Politics is at last learning the skills of self-organization. In 2004, Howard Dean’s presidential campaign used blogs and discussion as well as in-person Meetups to organize volunteers and raise money. Barack Obama’s 2008 campaign made brilliant use of social tools, including Facebook and the iPhone, to organize rallies and rake in donations. More profound, it used the social web to organize a movement. It also took advantage of the fact that other communities—such as that inside the DailyKos blog—had gathered around Obama. It didn’t hurt that one of Facebook’s founders, Chris Hughes, was an adviser to Obama’s campaign. We want to be connected. In the internet age, we have gained a reputation for being antisocial, for sitting on our couches, laptops on laps, earphones on ears, never talking to anyone. But in truth, we’re talking to more people from more places more often than ever before because we have more ways to do it. Thanks to Google and Facebook, I’ve reconnected with old colleagues and friends and made new business connections. The success of Facebook comes in great measure from returning us to real identities, real reputations, and real relationships. Anonymity had its place on the internet—it was fun for awhile, when, as the legendary New Yorker cartoon says, nobody knew you were a dog. But now we’re settling back to
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our norm: hanging out with people we know, like, and trust. We often want to do more than hang out together: We want to accomplish things together. Organization is a business model. Look at the communities around you—not communities you start but communities you serve. There is one, even if you are an airline or a cable company or a doctor’s office. There is a community of people with like interests and needs. Have you enabled them to talk, to share what they know and need to know, to support each other, to do business together, even to socialize? You are probably working with a group of people who have shared concerns: Staples customers who run small businesses, Gourmet readers who like to go on food holidays, Cisco router buyers who know a lot about networks, students who need jobs, alumni who are hiring. They are gathered outside your house. All you have to do is open the windows all around to let them talk with each other. But do be careful. Don’t assume these people care about you or think of themselves as members of your community. Don’t think that you can create a community. They’re not yours. They’re not going to start wearing Target T-shirts or singing the Toyota song—not unless you have an extraordinary product and brand (such as an entertainment brand or a hot designer label or Apple). That’s about the silliest thing I hear from any company: They talk about their community. I have sat in meetings with major consumer brands—candies, soaps, stores—as they say that they have communities that will come to their sites and do what they think they should do. Remember Zuckerberg’s advice: Communities are already doing what they want to do. If you’re lucky, they’ll let you help them. Once a community does gather around you, be aware that you don’t own it; the community owns itself. American Girl, the doll brand, started an online club as a safe place where young girls could communicate with each other and play games to earn points and gifts. The business wasn’t big enough for owner Mattel, so one day it up and killed the club, crushing my daughter, Julia, and cutting her off from the friends she had made there. Mattel should have learned who runs its town. It’s a lesson Barack Obama learned when his followers, disappointed with his stand on an issue, used his own campaign platform to organize a protest against him. Once you hand over control, you can’t take it back. We no longer need companies, institutions, or government to organize
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us. We now have the tools to organize ourselves. We can ?nd each other and coalesce around political causes or bad companies or talent or business or ideas. We can share and sort our knowledge and behavior. We can communicate and come together in an instant. We also have new ethics and attitudes that spring from this new organization and change society in ways we cannot yet see, with openness, generosity, collaboration, efficiency. We are using the internet’s connective tissue to leap over borders— whether they surround countries or companies or demographics. We are reorganizing society. This is Google’s—and Facebook’s and craigslist’s— new world order.
New Economy
Small is the new big The post-scarcity economy Join the open-source, gift economy The mass market is dead—long live the mass of niches Google commodi?es everything Welcome to the Google economy
Small is the new big
Mind you, big is still big. Wal-Mart is the largest company on earth. Big-box stores such as Home Depot continue to drive mom-and-pop hardware shops out of business. Media companies are conglomerating. Airlines are merging. Even small churches are being turned into condos thanks to the rise of megachurches. The Super Bowl can still draw 97 million viewers. Hell, Google itself isn’t just big; it’s ginormous. No, big won’t go away. But small is rising. A tiny start-up can become a manufacturing company using somebody else’s factory and distribution while selling to a worldwide market that can ?nd its products via Google. Any of us can start a highly specialized and targeted media company using blog software and paying for it with Google ads. One person can plant a seed to start a political movement. There won’t be a single new retail behemoth to battle Wal-Mart like Japanese monsters in Tokyo Bay. Instead, Wal-Mart and other big chains are getting nipped at their heels by a million tiny competitors—a half a million of them on eBay alone. In 2007 eBay sold $59.4 billion in merchandise from 547,000 online stores. It may be dwarfed by WalMart’s $345 billion, but in 2007 eBay beat the sales of America’s largest
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department-store chain, Federated (aka Macy’s), with revenues of $26.3 billion in 853 stores. Some weblogs now have more traffic and links than major media sites. Gawker Media, a gaggle of gossipy blogs started by Nick Denton, boasted in July 2008 that its dozen sites had double the web traffic of the Los Angeles Times online—254 million vs. 127 million page views in a month. All weblogs, as a group, now have an audience of readers (57 million as early as 2006, according to the Pew Internet and American Life survey) that is larger than the number who buy daily newspapers (50 million in early 2008, according to the Newspaper Association of America). Even more striking, Pew said back in 2004 that 53 million Americans had used the internet to “publish their thoughts, respond to others, post pictures, share ?les and otherwise contribute to the explosion of content available online.” The writers are starting to outnumber the readers. The Lilliputians have triumphed. The economies of scale must now compete with the economies of small. What changed is the de?nition of “big enough”—big enough to make money, big enough to survive and succeed. The tipping point of critical mass in business has fallen from the sky to eye level. Once upon a time in retail, you had to have a store, which needed location, location, location; capital to ?ll it with inventory; and cash ?ow to hire staff and buy ads to bring in customers. Then you had to have a chain of stores to gather muscle with suppliers and create marketing efficiencies. Now, you can ?nd customers via eBay, Amazon (which is as much a platform for retailers as it is a retailer itself), Google (where you can buy inexpensive and targeted ads), and new online marketplaces of neat and unique stuff such as Em (which sells handmade clothes and crafts). Pro?ts accrue sooner because you don’t own bricks or necessarily stock inventory or spend a fortune on marketing. Once upon a time, you couldn’t write for a living unless you were paid by a big publisher, the guy who could afford to own printing presses because he was the guy who had the big audience (a virtuous circle of its time). Now many writers make money blogging. Enough money? Well, that’s up to you. It could be enough to pay for your internet hosting or maybe a lunch or two—or a decent living. Here’s an accounting of the value of my blog: In 2007, I made $13,855 in ad revenue ($4,450 of that from Google) on Buzzmachine. I shouldn’t have quit my day job, you say. But Buzzmachine is what got me appointed as a journalism professor at
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the City University of New York Graduate School of Journalism (worth not quite six ?gures a year) and consulting and speaking gigs (worth a few times that in good times) and the contract for this book (worth about double those gigs). So over a few years, my weblog is easily worth seven ?gures. My cost: $327 a year for deluxe internet hosting. There are bloggers who make—and whose blogs are worth—much more. But Buzzmachine is big enough. Calculate in the falling cost of work if you want to go it alone online— no office, no commuting, no suits—and our de?nitions of pro?tability, critical mass, and success all shrink. The cost of independence has dropped. In an age when so many people are sick of their jobs—you know who you are—this self-reliance is empowering. Loyalty from employer to employees died in my lifetime. Now, given the chance to earn FU money and leave office politics behind, there is less loyalty from employees to employers as well. We’ll see more people trying to make it on their own because they want to and they can—or because they have no choice when shrinking companies lay them off. What should their former employers’ relationships be to these newly independent agents? Companies should encourage and support some oneman spin-offs. After U.K. football writer Rick Waghorn was laid off from his paper in Norwich, he started his own football blog and community with a former business colleague. Their old paper viewed them as competition. Foolish. It was the paper that had built Waghorn’s brand and audience. When it ?red him, it lost that investment along with his content. It didn’t have to. Instead, the paper should have sold Waghorn’s ads and promoted his site. It could have taken advantage of his expertise, work, reputation, and audience without having to pay his salary. Meanwhile, Waghorn would have been able to build a company. Everybody won. If I were to run the paper, I’d invest in Waghorn. I’d build a network of Waghorns. But it’s not easy being a Waghorn. Without the paper acting as his promoter, he and others like him have a hard time building the critical mass of audience and advertisers they need. Even in the small-is-the-new-big era, it is possible to be too small. At a conference on collaborative journalism I ran at CUNY, online news entrepreneur Mark Potts said that perhaps the only way to succeed at being small is to be part of something big: a network. Big still has its place. It’s the relationship between small and big that is evolving.
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If we end up with more independent agents able to do what they do best—making jewelry or providing computer advice or writing—I hope we will start to see a reversal of the malling of the world that big manufacturing and retail have brought: the sameness of scale. Before the Berlin Wall fell, I was amazed to ?nd a Benetton store even in communist East Berlin. They were everywhere. Starbucks cafés and Pret A Manger sandwich shops (which are one-third owned by McDonald’s) have replaced pubs all around London. Hip Soho in New York is ?lled no longer with artists and boutiques making singular merchandise but with Banana Republics. Everything’s the same; nothing’s unique; and that takes the fun out of making, buying, and owning. The small-is-the-new-big world could bring variety back. The craftsman lives again on Etsy, eBay, Amazon, and hip T-shirt company Threadless (where the buyers and wearers make the designs). In 2005, I read two posts by marketing visionary, author, and blogger Seth Godin about companies that just didn’t care. He inspired me to blog that we could now create new competitors. “Small is the new big,” I wrote. At the same moment, Godin, similarly inspired, wrote the same line on his blog (and he beat me to using it as the title of a book). “Get small,” Godin blogged. “Think big.”
The post-scarcity economy
We are entering a post-scarcity economy in which Google is teaching us to manage abundance, challenging the bedrock rule of economics, ?rst written in 1767: the law of supply and demand. Many industries built their value on scarcity. Airlines, Broadway theaters, and universities had only so many seats, which meant they could charge what they wanted for them. They were scarce and thus more valuable. Newspapers owned the only printing press in town and you didn’t, so they could charge you a fortune to reach their audience. Shelf space in grocery stores was limited, so manufacturers paid for the privilege of selling their boxes there. Television networks had a ?nite number of minutes in the day with only so many eyeballs watching, so advertisers competed to buy their commercial time. Scarcity was about control: Those who controlled a scarce resource could set the price for it. Not anymore. Want to sell your product to a targeted market? You
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don’t need to ?ght for a spot on the shelf in 1,000 stores; you can now sell to anyone in the world online. Looking for a dress everyone else doesn’t have when everyone else shops in the same mall? Today you can ?nd no end of choice only a click and a UPS delivery away. Don’t want to buy The New York Times on the newsstand or pay for access to WSJ.com for news on your industry? Now there are countless sources of the same information. Even if The Journal reports a scoop behind its pay wall, once that knowledge is out—quoted, linked, blogged, aggregated, remixed, and emailed all over—it’s no longer exclusive and rare. It’s no longer possible to maintain that scarcity of information. Advertising agencies act as if ad inventory were still scarce, though online there is a virtually unlimited supply of advertising opportunities now. Agencies have always liked one-stop shopping. Every fall, they go to network upfront parties, where shows are previewed, wine is poured, and much of the entire season’s ad inventory is sold off. Prime slots such as Thursday nights—when studios advertise weekend movie premieres—sell out at ever-higher prices even though the audience watching broadcast TV is getting ever-smaller (and, goes the reasoning, scarcer). Just as nobody gets ?red in technology for buying IBM, according to the old business rule, nobody gets ?red in advertising for buying TV. Agencies’ willful ignorance of new ad economics is a product of their own economics: They are paid a percentage of the advertising money they spend. The scarcer the ad time, the more it costs; the more it costs, the more agencies spend; the more they spend, the more they earn. That is not a virtuous circle. It’s a deathtrap. Advertising’s absurd mass-media economics have spilled over to online. I shrieked when Advertising Age reported that agencies were complaining of a shortage of ad inventory on the home pages of portals including Yahoo. The agencies were creating a false scarcity. There is no end of unsold ad inventory on billions of pages all over the internet. Many of those pages are far better targeted to their needs and would be cheaper and more efficient than Yahoo’s home page. Besides, it’s not as if a given advertiser’s message is going to be seen by everyone who comes to Yahoo, as not everyone goes to its home page. In print and broadcast, advertisers pay for the entire audience—everyone who reads a magazine is presumed to see every ad. Online, advertisers pay only for the pages on which their ads appear—or, with Google’s AdSense, they pay only when a reader clicks
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on an ad. The internet is a more economical and measurable advertising medium but its efficiency is not in agencies’ interest because, remember, the more they spend, the more they earn. Is there any scarcity left in media? Some argue that our attention is shrinking, but I don’t buy that. My attention is constant—I have 24 hours in a day, 18 of them awake and 17 of those sober. I choose what to pay attention to in those hours. I believe my attention is more efficient and spent on greater quality than ever, now that I have more choice and more control over my time. Some argue that trust is scarce. Well, I suppose that’s always true, but I now have more sources for news than I have ever had—not just my local newspaper but The Washington Post, the Guardian, the BBC, bloggers I respect, and more. Is quality still scarce? Yes, of course, but the more content that is made, the more opportunities there are for more people to make good content. The challenge is sifting through it all to ?nd that good stuff. Where we see challenges, Googlethink teaches us to look for opportunities. Businesses can be built on the need for sifting: commerce sites that ?nd the best merchandise, news sites that read so we don’t have to, and entertainment services that gather the critical opinions of the crowd. The internet kills scarcity and creates opportunities in abundance. Google has found a business model based on creating, exploiting, and managing abundance: The more content there is for it to organize and the more places there are for it to place its ads, the better. If your business is built on scarcity—and most are—you need to ask how you, too, can manage and exploit abundance.
Join the open-source, gift economy

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