Semantics Incorporated

Twine in Freefall?

What happened to Twine? Earlier this year, VentureBeat characterized Twine as an "early success", based on information from Compete.com. ReadWriteWeb followed suit in March explaining that Twine could soon surpass Delicious.com. In May, Techcrunch made the observation that Twine had overtaken Friendfeed in traffic. Fast Company wasn't as fast, but in June it echoed the comments with an article labelling Twine as "red-hot".

Twine indeed surpassed Delicious in May and June. That was shortlived, however. Since then, the same source VentureBeat used to discuss Twine's traffic, Compete.com, which Twine has endorsed a number of times, shows a huge drop in traffic. According to the traffic tracking application, Twine's traffic would have been divided by 10 between an April peak of 2M unique visitors and the August number of just about 208,000. Quantcast, on its end, reports peaks in April and July above 500K "people", together with a similar drop in August with 50,000 visits only. I don't know which source is correct about the volumes, or how their definitions of unique visitors and people differ, but the trend is what matters and it is striking. Alexa, generally much less reliable, doesn't show a huge drop, although it doesn't show any increase either.

According to all 3 sources, Twine is now back well below Delicious and Friendfeed. Have you read anything about that? I haven't.

So my questions: has Twine lost all his market momentum? Is Compete.com mistaken (isn't it what start-ups often claim after endorsing those sources, once south trends start showing)? Why has no press coverage been reported by Twine since May? Is it an anomaly, or the calm before the storm, and Twine is about to unveil a number of killer features and claim its groove back? (in my observation, once you lose momentum, it is very hard to get it back.) And why are none of the usual tech sources talking about it? Is it because it's riskier to report critically than to praise companies that succeed? Or has the summer just taken its toll?

Pictures speak 1,000 words:

 

 

 

This is a good illustration of the post I wrote last Friday on my other blog Growth Times (previously To Revenue, I just completed a name change), Welcoming Constructive Criticism, a Key Success Driver for Start-Ups.

For the record, back in February I published an interview with Nova Spivack, the founder of Twine, in which we took a 360-degree view of the application, with a focus on some concerns raised on a VentureBeat discussion in the past. I published the interview as is but added personal comments on usability stats provided by Twine, in my view showing what I have long suspected to be low engagement. Nova took offense at this public criticism and instead of looking at the feedback itself and address it calmly and constructively, he decided to libel me on twitter, through tweets he has since deleted. Ok, I know, I sound like a conspiracy theorist - but anyone who knows me know that, while I do like a good debate, I put great pride in being as fair and honest as possible, and I value truth and transparency before all. A number of users (and excommunicated users) have already experienced the Manichean, friend-or-foe approach of Twine's CEO, that's conditional upon paying lip service to the application. I have already denounced this type of PR approach in a post on this blog. Anyway, the point is that Nova mentioned he wouldn't take any interview with me anymore (he probably missed that I'm not a journalist), and so I have not contacted Twine for this post. I'm sure they'll respond one way or another, and hopefully we'll get some clarity as to whether this traffic issue is real. 

Let's be clear, I have also long complimented Twine and described it in my talks and posts as the flagship application of the semantic web - and I still do. This flagship status is why I am so interested in it. I believe we are only at the dawn of the metadata age, that our capability to create and manage metadata is still primitive and, as a corollary, that autotagging of the kind Twine achieves is much needed. I long for some of the functionalities announced by Twine for the end of this year, i.e. the ability to manipulate tags through ontologies and create complex queries as a user.

My theory was, and still is, that twine has a usability deficit. So many users going to Twine report 'not knowing what to do' or 'what it's for'. It lacks a sense of direction. Another example is the Daily Digest that a user receives from the application. I relied on this digest when I had but a few subscriptions to twines. Now that I have well over a dozen, the digest gives me an indigestion. Twine offers the option to select which Twines you want to see in your digest, and that's a step in the right direction, but not a solution to information overload: it's obvious what's needed is item-level selection and prioritization, not removing a full twine all together. As far as I can see, many other users have complained about this, but I was told that's a small issue and that's not the focus of the efforts. Addressing this, Twine would have the potential to become the filter of choice for information on the web, but I guess that doesn't strike them as something important to do. 

That wouldn't be a problem if at least Twine wasn't reacting defensively about those suggestions. But instead, interacting with them feels like grinding metal forks with your bare teeth. As such a rich tagging application, it's disappointing that Twine doesn't go beyond "good" or "bad" when labelling public feedback. Now it might be paying the price of its complacency towards constructive critics. And if the graphs above are confirmed, they might want to pick up a copy of Crossing the Chasm on their way home, too.

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Attention Web 3.0 Start-Ups: Redirect 25% of your R&D Budget to Market Understanding and Development

In my observations on the Semantic Technology conference last month, I mentioned I would be blogging separately about the dire lack of investments by Web 3.0 start-ups in market understanding and marketing.

Before I start, let me signal some conflict of interest here: in the course of my job, I lead efforts on market understanding and positioning, brand awareness and lead generation. The idea is that developing my market is in the interest of start-ups with a stake in Web 3.0 and the semantic web. I get more business when they do :) But please do discount my words for this bias, and decide for yourself, when all is said and done, whether we have a solid case here or not.

My main claim with this post is that companies in the Web 3.0 and semantic web space are downright bad at filling unmet needs, packaging their offer effectively and cutting through the market noise to secure users and revenues. It even appears this incapacity to grow revenues has a direct impact on their ability to make money (ok, it's sunny outside, after five days of clouds there is no harm in having a little fun, is there? ;)

The large and growing number of players at SemTech told me that we are already in a crowded market. And yet: few real products, and very few sales. Most of the people there live on R&D funding from public institutions and overtrusting angels, not client receivables.

Why?

As a VC said during his talk, "this is a very early-stage market".

Allow me to translate.

That's code for "I don't get it, what are you guys selling here? Better fix that quick if you want me to come back next year"

This has been an early-stage market for over 8 years, which by my estimate is 1,302 web years. And it is going to remain so, as long as players prefer to hire one more Java "guru" as opposed to investing properly in market research, a business model and some marketing.

It was obvious, just going around, attending presentations and talking to people, that the business side of those companies is generally in an advanced state of starvation.

So many companies that presented couldn't enunciate any reason to use their products in an hour, let alone an elevator pitch. Too many had inexpressive and even customer-hostile names (ask me for examples by email...) and geeky logos that don't talk to their audience; too many, to present their product, sent technology experts apparently missing the "communication" function; too many didn't have a clue about their market, how to penetrate it, and no thought as to why, when and how often would anybody use their "solution". Please, let's call it a technology.

If Web 3.0 companies are eager to become mainstream, it didn't show in San Jose.

I brought up the problem of underinvestment in market understanding and marketing up at my talk as well as with a few start-up executives. The most common response was that resources at start-ups are limited. I know they are, but I don't buy it when I see the same companies already employing a dozen folks working on the product development side and hiring extra R&D FTEs. What's the ROI of that as opposed to taking one dedicated business person on board (and it doesn't even have to be full-time to start paying off)? I can recognize a case of feature and scope creep when I see one, and this is the supersized version of it. "Just one more feature!"

The reason for that are diverse, and have a lot to do with the academic and R&D origins of this stuff. I'll expand on this in a broader post on my other blog To Revenue at some point, and explain how I think even fundamental R&D is moving towards a more market-driven approach. Suffice to say, most if not all of the investment for the semantic web went into R&D and technology development to build the tools (standards and applications), and nothing, or very little, to test and refine our initial understanding of the market problems these technologies would solve, and evaluate the best way to solve them.

Luckily, the solution is simple: as a good rule of thumb, I’d see every start-up in the web 3.0 and semantic web space redirect at least 25% of its R&D expense to consumer research, brand awareness, partnerships and marketing. All good things that will make a start-up stronger if they don't kill it (better that than a slow, painful agony).

As I see it, the development of any market solution is an exercize in bridging the gap between two things: technological possibilities and market needs. Focus on one at the expense of the other, and you'll find yourself quickly in la-la land.

I can't keep count of the numbers of start-ups I come across that have gone too far along the product development curve and find themselves with a technology they don't know how to sell and to whom. Invariably, they haven't tested the waters prior to funding  development or continued to tune that development to meet real needs.

Why risk a reality check? It was just all too exciting at the time.

So curb your enthusiasm and get yourself a suit, with that free business budget you just found.

 

PS. Business folks need to explore ways to deliver more value, too. It takes a special kind to be effective at a tech venture, and the rapid changes in marketing also make it challenging to deliver business results if you come from a traditional marketing background. I talked about the difficulties in balancing the tech and biz needs and cultures here, and I will tackle the marketing revolution in a future post.

Tech vs. Biz Type Divide: Tackling the Number One Product Failure Driver Headfirst

I am back after quite some time, my ability to blog being constrained by business requirements. I am indeed happy to report that Growthroute's activity is growing rapidly, with clients in the web 3.0 space in particular. I know, I know, I have not even published my thoughts about semtech yet. I was there for less than 2 days, but there were some interesting things I took away that I have not seen expressed anywhere yet, so I will blog briefly about that very soon.

In the meantime, I have just published the slides of a beta presentation I gave at Communitech, the innovation and entrepreneurship hub in the IT mecca that is Waterloo, Canada -- and I believe it should be of particular interest to ventures in the semantic web and web 3.0, since it tackles the gap between techies and business people, discusses how that affects commercial success, and explores potential solutions. The post and slides can be found here. I welcome all constructive feedback, with few limitations on what constructive means.

Launched the GrowthRoute Ventures website

I haven't blogged in a short while as I was busy building the site of my consulting shop, renamed GrowthRoute Ventures. The url is www.growthroute.com, please visit and comment here.

With this and my partnership with the awesome team of Riverdale Partners, I now have a complete offering targeting innovative companies from early-stage start-ups to funded ventures to innovation teams in larger groups. The driving force is to turn those organizations into category leaders by "reverse-engineering revenues", as I like to think it.

We focus on the endgoal, be it an independent play, an acquisition, or an IPO (a remote objective in the current economic conditions...), and we work on all its drivers, through strategic planning, product management, marketing and sales channel development. In Ontario where we are based, we nicely take it where government-backed advisors like Communitech and MaRS leave it; and we also cross borders, with clients in the US and Europe.

Having said that, I know techies don't quite like promotional stuff like this, so I promise to resume my comments on semantic technologies very soon! Luckily, my thoughts have continued to accumulate on the topic and I've got plenty to discuss.

"SemWeb Inside" or "SemWeb Illustrated"?

I am posting this post as a "comment to the comments" generated by my last post "Will We Convey the Meaning of Semantics?", as a means to surface the discussion and collect additional reactions.

Csaba makes a good point. Indeed it would be unfair to go after technology inventors for the problem of what we common people characterized as "jargon". As I mentioned in my post, there are many reasons behind the creation of a new vocabulary, some of them very compelling from a value creation perspective (e.g. to express new concepts and differentiate them from the old ones), and others less (e.g. to keep control of the technology).

Generally speaking, I tend to think that (1) the creation of new concepts is the key motivator of inventors for this behavior (2) it is not really a core competence nor the job of original inventors to democratize/simplify their vocabulary, as there are people who can do that much better. I described that previously in a blog post, writing that "Marketing semantics is NOT rocket science, so don’t ask rocket scientists to do it!".

This is a bit of a sweeping statement, as there are exceptions to the rule, but in my experience I'd say it's generally better to let people not subject to a knowledge curse (see the same post) do the translation. To be honest, on semweb specifically, I did find it a little funny as my title suggested that experts in semantics, which is the "study of meaning", expressed their concepts through a vocabulary that is relatively difficult to get, and prone to creating some confusion. But in all fairness, let's remember that for the semantic web, the idea is to have machines get the meaning of our communications.

The other point I made in the post you're commenting on, is that there is a new wave of "translators", if you will, ready to take on that job, and that is very promising. This should really be the idea we retain We are at a juncture, and pioneers must do everything they can to facilitate the adoption of semweb concepts and technologies by this new wave of users. For the most part, I think this is now recognized in the industry, and there is a move to make the semweb more accessible. We probably had to get to a certain stage, technology-wise, before investing in this effort.

Image by dullhunk
via Flickr

Lastly, a point I didn't make in this post but that in retrospect I should have made, as it often surfaces (and certainly did at the Semantic Technologies Conference this year), is that a way to disseminate the semtech concepts more broadly is also to integrate them into applications, without boasting them front and center. I've heard many say that this "semweb inside" tactic was the only way to get the semweb "out". When we'll succeed at this approach, the semweb will have travelled a long way.

Ultimately, I don't know which way will work best, i.e. "semweb inside" or "semweb illustrated" (i.e. explained, clarified, and/or simplified), but I strongly suspect it's not an Either/Or statement. Both approaches should be used, depending on the intended audience and value proposition. Educating the mainstream end users about RDF will probably do little for adoption, but for web developers, who currently remain the most natural audience for semweb popularization, it's a different story. Let's not burn any bridges.

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Will We Convey the Meaning of Semantics?

Image via Wikipedia

Check out this post if you are interested in market adoption issues: it is entitled The Gap between the Web 2.0 and Semantic Web Community (tentative post), on a blog aptly called the Semantic Puzzle. I just commented on it, as I found interesting how Jana Herwig denounces the tendencies of semweb techies to use jargon (a topic I had also contributed to during the last semantic web gang podcast).

But Jana, I'm with you: it's perplexing to see semantics specialists having such a hard time to make themselves understood!

In my opinion, it is inevitable that semweb pioneers use a vocabulary that seems overly complex to the next wave of adopters. Why? Because anyone involved in the creation of a new technology has incentives to create a new vocabulary to define their inventions. And once they've done it, they have a disincentive to simplify that language for the next wave of adopters.

C'mon people, why would they want to have to dumb things down? They've come up with the vocabulary, they now master it, and this language perfectly describes the vision of the world these pioneers uphold! On top, it ties these early inventors together in a fraternity, a tribe, as any social theory would tell you.

Sure, for the vision to be realized, this second generation of adopters --or third one, depending on which innovation diffusion model you use--  must embrace the concepts developed by the first generation (or first and second...). But doing this also guarantees a loss of power for a majority of the pioneers, whose ideas will be seized by new hordes of self-centric, consuming barbarians. What are you waiting for, hold the gates!

Now, extending innovation diffusion theory a little, we can expect that, sooner or later, these hordes will manage to take the fortress held by the original semweb priests, realize that RDF, SPARQL and other OWL is Latin for much simpler ideas, and explain that to even larger hordes into their plain Middle-Earth languages. It's likely there will be losses in translation. But the alternative is to have them burn down the Library of Alexandria.

Ok, I'm mixing mythologies here, but you get the point, don't you? Well, that's exactly what simplifying semantics is about.

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Marketing the Semantic Web, My Article on Nodalities Magazine

Talis has just released its latest issue of Nodalities Magazine, including an article I wrote on Marketing the Semantic Web. You can find it at www.talis.com/nodalities, and I copied the article below (together with URLs that were not included in the pdf version).

My article notwithstanding... this is a very strong issue of Nodalities, with an emphasis on the business applications of the technology, and my personal favorite, the quest for the "killer app". For those of you interested in the intersection of business and semantic technologies, I invite you in particular to check out the great articles by Andraz Tori, "New Web Cambrian Explosion - Killer Apps?"  and Eric Hoffer, "Semantic Technology in the financial industry". I won't mention that of Alex Iskold on search as I know you don't need an ego boost, Alex, after all those offers for financing pouring in at the semtech conference... ;)

So, here is my article in PDF version, which you're warmly encouraged to redistribute (as provided):

Download Nodalities_Greg_Boutin.pdf

And the HTML version:

Marketing The Semantic Web

Time To Deliver

The so-called Semantic Web is a set of technologies intended to facilitate data analysis and transformation by microprocessors, thereby extending the functional reach of machines. As such, it’s capable of enhancing a wide range of existing applications, and enabling new ones we have yet to picture. Given the breadth of possibilities and interests the semantic web covers, it will come as no surprise that there are many ways it can be marketed.

Building general awareness of the possibilities offered by those technologies is critical to getting to the so-called tipping point. In that respect, the semantic web has so far done a pretty good job. With the endorsement of the W3C, and Tim Berners-Lee as its top rep, it had the perfect seal of approval to start with. The industry has used this as a stepping stone towards enhanced awareness among technologists and early adopters. Just in the past months, there were articles about the semantic web in the tech sections of The Economist, the International Herald Tribune, the New York Times, the Financial Times, and in Scientific American.

Driving user adoption has proved to be a bigger challenge. Invented by the web equivalent of rocket scientists, the initial offering was too complex. For the most part, it remains quite daunting even today: simply including semantic capabilities on one’s website remains overkill for most webmasters, for example. Semweb technologies have managed to buy time by delivering a few narrow benefits, first in vertical B2B markets (see W3C semantic web case studies, or the offering of Zepheira), and more recently, in the consumer market, through services like Powerset, a semantic search engine for Wikipedia; UpTake (previously Kango), a semantic travel search engine; and of course Twine, the most imaginative semantic service so far, but still a semantic mashup between social networking, RSS feeds, and del.icio.us, whose key benefit appears to reside in its bookmark recommendation engine. Among larger corporations, Reuters has been the first one to buy into the concept with its OpenCalais service.

In a positive development, semweb technologies are increasingly infiltrating existing value propositions: Yahoo is testing the waters with its Search Monkey platform and, having acquired Powerset, Microsoft is expected to rapidly incorporate semantic capabilities in its search engine. I was told that Google already makes use of some sort of semantic indexing capabilities in its search engine, although I’ve seen little evidence of it so far. I’d make a wild guess here based on limited evidence I collected, and say that the search gorilla does not have a search monkey in the making, and instead is taking a statistical approach to tackling semantics, which might lead to some interesting development.

All in all, the semantic web has had difficulty delivering on all those promises it made. And so everyone is now eagerly awaiting a killer value proposition to catalyze market adoption and bring those technologies into the mainstream. Corporate search, travel search, wikipedia search, recommendation engine: those are all nice-to-have apps, but not killer apps. And so, at this stage, marketing the Semantic Web is not so much about PR and nice brochures as it is about building marketing right into the products, to get that killer app out and silence the cynics.

But how do you go about building a killer app for such complex lab technologies?

My Personal Recipe For Killer Value Propositions

For all its long history and numerous gurus, marketing surprisingly remains much more of an art than a science, and it is especially wasteful and ineffective at producing killer value propositions. In my previous roles, I have been grappling with a number of theories and concepts supposed to achieve just that. Most recently, I used the Pragmatic Marketing framework, which I implemented through a modified Agile Programming process adapted to fit our marketing needs.

Quickly, the Pragmatic Marketing framework became just a nice-to-have checklist to assess whether we were covering all the basics, and to oversee the interactions between the different marketing pieces I was putting together. I found that Pragmatic Marketing was not designed to come up with killer value propositions. In fact, it itself claims to be dedicated to “managing and marketing technology products”, implying the product already exists. Ultimately, what I learnt through all this is that common sense and logic, supported by some analytical firepower, a strong sense of the big picture, and the intellectual readiness to let the market show you what works and what doesn’t, beat fancy theories and jargon every time.

With this in mind, the first piece of advice I have for anyone seeking to find the semantic web grail is to keep things simple. As I wrote last month on my blog, that generally involves simplifying and cutting things to the chase. Clarifying and focusing on simple benefits. This is notoriously difficult for many technical founders, and yet they must learn to let go, or risk falling into market oblivion. For more on this, I invite you to read the chapter on the Knowledge Curse in the excellent book Made-to-Stick.

A second piece of advice is to not define yourself too narrowly as a semantic web company. For one, you want to avoid marketing myopia, as the killer app may be one powered by “semantics + some other technology”, and for two, it is generally more sustainable to define yourself by the benefits you provide rather than by the technology that supports you. If superior competing technologies come along, the brand that you have built by serving your customers will generally still grant you the best sit at the table.

To complete that work, finding an objective marketing lead and empowering her or him to deliver is essential. That person should be eager to do four things:

• learning quickly about your potential customer segments and finding out what they do;
• learning quickly about your own competencies and resources and finding out what gives you an edge. You need to have a perfect understanding of your competences, i.e. what will make you better than others at addressing those problems;
• learning quickly about your competitors (and potential partners) and finding out what could give them an edge.

And the fourth, having your marketing lead continuously synthesize this into a benefit analysis that details out the main actions you intend to help users with. The key to success is to conduct all four marketing activities in a quick iterative manner so that, when you learn something about your customers for example, it is immediately reflected into your view of the competitive landscape, in the benefits you are working on delivering, and in the competences you need to that end. Let me emphasize that further: the quest for a killer value proposition is about quickly iterating between knowledge of your capacities, those capacities of your competition, the needs of your consumer, and harvesting new insights from it every time into a coherent benefit analysis feeding your product development process.

Once the core benefits you plan to deliver are defined and prioritized, you need to turn them into features, bundle those features into products, and plan for the product development by having the Product Manager use those inputs to develop a first draft of the product requirement document.

The key idea there is to sequence your launch(es) as much as possible, so that you test your proposed value propositions in the most cost effective way, rapidly seeing what sticks and what doesn’t. Sequencing also helps by ensuring that your development always has an immediate deliverable to work towards. Lastly, and I’ll keep the detailing of that for another time, build the product so people talk about it to each other (I found the book Word Of Mouth Marketing very useful in that regard). That means having emotional benefits too, something web start-ups often disregard at their own peril.

I have summarized the above in the chart below. C’mon, it’s not that fancy-pants, is it?

[note: the jpg doesn't turn out too nice on the web and the pdf, so feel free to ask for a clean version by email if you need it, by sending me a comment to this article - I won't publish it]

 

You’ll see references to the concepts of Organization, Culture and Processes in the chart. Indeed, building a killer value proposition is not a process in isolation, it needs to be managed from the broader context of motivating people, focusing their efforts on the right task, organizing handovers and interfaces, and learning from it all, so the organization gets better and better at it over time. This is often a difficult one for start-ups with limited resources, and yet a key success driver. Taking an even broader look on the shared drivers of success start-ups, the book Blueprint to a Billion furthers the debate to board organization, alliances, management teams and other things important to crafting and launching killer value propositions.

Digitizing and Monetizing Existing Needs

One of the long-lived myths I’d like to dispel, and which will take us back to the semantic web, is one that I often hear from venture capitalists: “don’t try to build a new market from scratch, go where the money is”. Venture capitalists are not wrong, it’s just that the way they express this idea is rife with potential misinterpretations. It leads too many start-ups to try and beat Google at the search game, for instance.

Creating new needs is close to impossible. Going after existing needs addressed by online players, too, is extremely tough. Common wisdom says that your technology needs to be 10 times superior to the current incumbent’s technology if it stands a chance to overcome it. Incumbents have had time to look at the problem from all angles, and they have normally prepared themselves to all potential direct attacks.

Instead, take existing needs that are neither digitized nor monetized, and monetize them by improving on the ways they are currently met. I didn’t invent this; it is a key lesson from experience, also highlighted in a book called the Innovator’s Solution (one of a few non-fluffy recent marketing books!). You’d be surprised by the number of tasks today that are still a real pain to accomplish and would greatly benefit from online assistance!

One such need I uncovered in my past explorations, to illustrate the idea, is that of synthesizing information. There are a lot of applications out there to search information, much less so to put it together in a coherent manner once I have found the data I was looking for. How do I do that today? I paste things from web pages into MS Word, or save them onto my hard drive. Then I review them, one by one, taking what I need and leaving the rest. I use my brain for the most part, and a few basic tools that are only a marginal improvement over paper. There are no tools yet that compete with my brain for those tasks. And what if I wanted to find out at a conceptual level where we agree and where we disagree on the results of the US policy in Irak? Again, the optimal way today is to discuss it directly with you, or a long winded conversation online. I’m sure the semantic web could enable more productive ways of doing this. What if I wanted to connect on LinkedIn to all the bloggers having blogged somewhere about the semantic technologies conference? Or to get a timeline summary of all the dates and event present in a particular set of websites, together with a number of new visualization possibilities for existing web information. Pretty much impossible today. Wow.

Those are all existing needs that are not addressed optimally, and that semantic technologies can solve. Marketers can review existing processes to see where people spend time, and improve parts of those processes. Much easier than vying to take dominant companies out of their thrones. The bigger and more ubiquitous the need, the more “lethal” the value proposition. Just look beyond search.

In sum, to get to a killer value proposition, take a technology, simplify it, focus it (on clear benefits), structure it, iterate it, sequence it, crashtest it, sample it out, evangelize it, and watch it grow! Hopefully those thoughts will help a little to build the semweb champion which I strongly believe will be instrumental in taking our technologies to the masses. The “semantic web” concept is complex and reflects a wide brochette of technologies and solutions: what we need now is a leader who will dispel that fog and finally leave the industry with a clear web forward!

Is Web Traffic Growth Decelerating and Placing Investors' Focus on Profitability?

I'm copying here a comment I wrote on the blog of my friend and classmate Charles Hudson, whose views I very much enjoy. I invite you to read his post, which raises some great questions on where the future growth of the web is going to come from and --more importantly :)-- the valley's current state of mind on this issue. I also got an answer from Charles, see below for the whole exchange. Please post your thoughts and reactions to feed the discussion.

My comment: "This time I don't quite agree with your views, Charles. Traffic growth vastly rules in the web world and will continue to do so for a while, for the simple reason that most monetization opportunities rely on fast traffic ramp-up. Online ads (be it PPC, PPA, or PPT), recruiting fees, even new B2B opportunities, which quickly move to the SaaS model, all rely vastly on building traffic, as the main revenue driver before even the monetization potential of this traffic.

Growth is not slowing down across-the-board. Of course, if you're talking about existing web services, those are maturing. Just like any other industry out there, those services follow the typical market cycle we've learnt about in our business studies. Tying curiously into your conclusive point, however, I am convinced that there is a high potential for new technologies, to disrupt the existing value propositions, and to fulfill a whole lot of new ones. I worked recently on the "thinking process" for instance, and what parts of that could be brought online. Today, this is clearly unaddressed. Semantic technologies, among others, could change that, and create a whole new web market from it. A fast-growth one, by traffic standards, and not necessarily profits or revenue. I don't disagree with the need to focus further on monetization, but I think that in many cases getting traffic is the best proxy metric, short of being able to project out the cost and revenue architecture in dollars and cents right from the start.

So, if your argument is for the market to focus further on monetization, rather than just traffic, then I can buy some of that. If it is about the web growth slowing down, then I think you need to specify it further, and list which services you're referring to. Because by my count, there are still billions of people without access to the web, and 100's of millions of web users who would use the web order-of-magnitude times more if the value propositions went beyond the simple (by future standards) search/communicate/play benefits in place today. If that doesn't offer huge potential for land grab and hypergrowth, I'm not sure what does!"

Charles' reply:

"Greg,

Thanks for the thoughtful comment. My main point is the following - if you have a business that doesn't generate revenue at tens of millions of unique users, I find it hard to believe that doing 2-3x times as many users would suddenly crack the code.

For businesses that have figured out how to convert traffic into revenue, more traffic is obviously a good thing. For those that haven't, I'm not sure what will happen if growth for growth's sake is no longer sufficient to keep the interest of their investors.
reply"

And mine:

"Thanks Charles. Good discussion. I obviously agree with that clarification, what I'm disputing are the 2 original assumptions you base your point on:

1. "Growth for growth's sake" carries less weight with investors nowadays or, quoting you, the “pay for growth” era is coming to a close. I'm interested in some backing facts here, because from my conversations it seems that investors are investing less because start-up costs are much lower, not b/c they became more picky, which they are hardly in a position to do given how much financing there is available today. The trend seems to be that entrepreneurs push the timing for getting VC funding further and further out.

For early start-ups, I believe that traffic is still a good enough proxy for revenue that if you can prove exponential traffic, or qualified traffic, with a strong management team, VCists will fund you even if the path to revenue is fuzzy, which it always is at that stage. In other words: lots of traffic will get you funded, no matter what.

2. "A lot of the “interesting” land (top app position on Facebook, top web 2.0 application mindshare for the moment, top 500 traffic rankings) has been claimed and it’s getting harder by the day to unseat those who occupy said land" Here my point is that this is a given for maturing industries. Facebook is maturing, Google has matured, web 2.0 app have matured. That's why start-ups must look (and are looking) at the next thing. Web 3.0, semweb, mobile apps, etc...

I'll leave it at that that, as I think we agree on the overall ideas"

A Unified Theory on Innovation, Marketing, and the Thinking Processes Supporting Them, Applied to the Organization of Information

These days, for reasons I will develop later, I am diving deeper into the most influential and the latest theories in my fields of professional interest, which gravitate around Innovation, Marketing, and the mental processes that best support both. I am interested in integrating those separate topics, and developing a systematic, practical approach I can use to facilitate breakthrough innovation and help produce killer applications, especially in my favorite space (geeks rule!), the Organization of Information, a broader term I use to refer to knowledge management, semantic and tagging, and a range of other related fields aiming at organizing and leveraging information.

To conduct all that groundwork, I have created a reading list with both the most thought-provoking and the most recommended books I came across on those topics. You can find this list in the right column of this blog, by scrolling down.

The list deserves a warning: generally, reading lists are lists of books one likes. Not this one. My list contains books I admire for their ideas, books I find irritating, and books I haven't read yet but will, because I was invited to, think I want to, or just so I can support my views on their theories. I am a tough public for business books, finding most to be simplistic gospel from pompous authors. Those owe a lot of their success to catchy sentences and serious-looking charts that are totally impractical in the real world. A picture of the author with a "blue steel" look on the inside cover usually constitutes a fair warning that this is make-believe prophetic material...

I laugh inside when I talk to executives who keep referring to such books as their bibles... Cults have never been innovation hotbeds. Thinking for oneself is the real innovation driver and, to be useful, theories must be critically examined, digested, locally transformed, gauged against alternative theories, and integrated in a unified approach. Ask the executives to actually tell you how the theories was applied in their organizations and what killer application it can be credited for. Anything short of that and you likely are in Lemmingsland.

Above all, the main shortcoming I see in business books, is that, even if there are good ideas in some of them, I haven't so far come across one that was broad enough, granular enough, and actionable enough, to be used as an integrated process to create and sustain killer value propositions. Which I'd argue is the only thing, in my opinion, that an organization leader should care about. So let's look at those published building blocks and see if we can come up with that unified theory. Did you really expect a promotional speech on my reading list?

The Difficulty of Breaking New Grounds and What to Do About It (a take-away from the May Semantic Gang podcast and the Semantic Technology conference)

The Semantic Web Gang met again last week and we talked to Powerset CTO Barney Pell. You will find the podcast here. During the introduction by Barney (who incidentally, is in the room delivering his Powerset presentation as i write this – we are at the SemTech Conference in San Jose), I grew really interested in his positioning and messaging, and especially with regard to a well-known, proven web activity: Search.

While so many of the articles about Powerset assimilated it to a search engine (see this article as one of the many examples), recently the company has tried to break away from that association (see that article). Barney made the point clearly when answering my question on the topic.  That is a smart move. From a business perspective, suffice to say that positioning oneself against Google would be unwise. From a user perspective, there seems to be little interest in trying yet another search engine. The next thing in search needs to be leaps and bounds above Google, and by that I mean helping you find faster what you’re looking for, from anywhere on the web. Ideally, the result should always be one click away from your query! No one currently competes with Google on those dimensions. Granted, Powerset is on to something with natural language search, which has the capacity to dramatically increase result quality (and ultimately to accelerate querying speed too - think of the possible combination with upcoming voice recognition technologies). But let’s be serious: Google is ready for that long-known threat.

Crossing the search chasm

So, Powerset is right in trying to stop orbiting Google, but announcing it is not enough, and for now it seems that the search gravity force is making it difficult for them to break free. They continue to be described as a search engine (even if not a Google slayer), still look a lot like a search engine with a homepage a la Google, and even present themselves as a natural language search engine, a Wikipedia search engine, or a deep search engine. Anyway you look at it, it still shouts “search, search, search”. From a marketing perspective, the gap between Powerset’s claim and its execution is striking. Sure, this may partly stem from a motivation to sequence their go-to-market strategy, to present simple benefits to users, which I very much applaud. But whatever you call it, the direction is still about delivering “search” as the key benefit to the user.

What Powerset and so many other start-ups in the online space are struggling with is a well-documented marketing problem. Think “crossing the chasm”. The difficulty is to invent a value proposition that’s distant enough from the existing ones so it stands out from the crowd and is not perceived as a threat by larger incumbents, while being familiar enough that mainstream people can understand it and try it. At the start of an innovation wave like the one we currently witness, fitting new paradigms into old mental models is a make-or-break proposition.

There are well-known solutions too. One of the most obvious ones is to find a new value proposition and sequence it in small pieces, ramping up each piece in turn by relying on an intuitive interface and on early adopters to tip and educate others. What the applications trying to take advantage of the semantic web haven’t really done yet is the first part: landing on a compelling value proposition. It must fit the conflicting criteria of being both new and simple.

Marketing semantics is NOT rocket science, so don’t ask rocket scientists to do it!

SIMPLIFY is one of the key verbs heard at the current Semantic Technology Conference. Flagship applications are or should be working on simplifying their value propositions: Twine announced it is dumbing down its interface, Zepheira was told in Q&A that its interface looks too complex (and it takes some imagination to see how nurses would use it), analysts like Carla Thompson at the GuidewireGroup report having a dreadful time trying to explain what the semantic web does to the media, and Reuters’ Thomas Tague suggests that the word “semantic” be replaced and that applications go out without any reference to the technology that powers them. Clarify and focus on simple benefits.

It’s worth repeating. Clarify and focus on simple benefits.

My claim here is that getting that done will take more than the geniuses who came up with the semantic web in the first place. And by more I mean, in fact, less. To paraphrase one of my favorite books, “Made to stick”, most tech-focused leaders face a “knowledge curse” that prevents them from marketing their ideas effectively: in the conference session on bringing those technologies to the masses, I made the point that the people who initially built the semantic technologies are generally not the best equipped to lead the charge in bringing those to the market, i.e. simplify, cut, communicate the value proposition. I stick to my point. I saw that again and again, in fields such as software, clean energy, telecom. Those people know and care too much about the technology, and have a hard time to let go.

That really jumped out throughout the conference, where so many founders fell short of describing their value proposition in simple, memorable ways. Compared to most presentations I attended before from professional CEOs and marketers in mature industries, the comments made on the business and customer acquisition side felt well, frankly, unbaked. My hypothesis is that the mental models needed to develop an innovative technology are radically different from those needed to bring it to the market, and especially to land and communicate a clear value proposition (and vice-versa). Those models take time to cultivate. Technological founders who have them are rare. Those who don’t can educate themselves and work with people whose job it is to translate complex technologies into simple solutions.

Salvation for semantic rocket scientists: develop the right mental models and rely further on “market geeks”

Let’s start with education: to overcome the hurdle and cross the chasm, it is important that those tech-savvy leaders force themselves into different mental models that focus on the immediate needs of the user and not the endless possibilities of the technology. To that end, I’d recommend especially (again) the book Made to Stick, which offers a clear methodology for honing in on viral messages. Although it appears less directed towards the development of value propositions, I believe its core ideas remain very relevant to that purpose. The process of coming up with a crisp value proposition really is similar to that of communicating it out. As Thomas Tague said rightly in his infinite wisdom: “if you have to explain it, I don’t want it”.

Other reference include classics such as What took you here won’t take you there, Crossing the Chasm  and Inside the Tornado will also help. Disclosure: I am not making any money on any of the book links here.

Learning takes time and motivation. Often, tech specialists are more motivated in identifying the next frontier rather than matching those with mainstream customer problems. The solution here is to give that task to market specialists. Those will be savvy with jobs such as positioning, messaging, targeting, and fields such as marcom, consumer discovery, user interface, product design. You need this. We know, because customer needs is what we do ;) This may sound like a plea for innovation marketers, strategic marketers (and the emerging concept of “marketing geeks”), but really, it's not. It's a plea to get more semantic web start-ups off the ground.

The semantic industry is at a point where it needs to attract such professionals, and give them a leading role in the definition of application specs, customer acquisition thought leadership and marcom efforts, supported but not directed by the technology specialists. People in love with the customers and users, not with the technology, are best equipped to lead customer adoption efforts.