Archive for the ‘TechCrunch’ Category
September 11, 2008
Have you heard? Yammer is Twitter for corporations. On Monday it launched. On Wednesday, it won TechCrunch50’s top prize. By this morning, Yammer was reporting it had signed up 10,000 people from 2,000 companies. This afternoon, the great Dan Fabulich of Redfin asked if we could start using it.
Of course, Dan was only being polite: the appeal of Yammer’s business model is that anyone can start using it (Redfin only has to pay to control it). And even if I’d said no, another Redfin employee would have started using it anyway.
So I said yes. And then thought: what does this mean? And what have we done?
What Does Yammer Mean?
What Yammer means to me is first that there’s a new model for selling enterprise software, and it resembles nothing more than George Soros’s efforts to undermine the Soviets by air-dropping fax machines behind the Iron Curtain: tools are downloaded and used, with executives & IT only later having to accommodate the facts on the ground. The whole question of whether Yammer is actually productive is beside the point, because it’s so easy and fun.
Yammer also means something more, that email is broken: overwhelmed with spam, cumbersome to open, with responses feeling like an obligation rather than an option. If you want to deliver a message to someone, almost any other medium is more likely to 
get noticed: IM, Facebook, Twitter, RSS.
What Have We Done?
But the bigger question about Redfin’s use of Yammer is what have we done?
While I am glad to try a new technology — Dan is such a fearless pioneer — I worry that Yammer might be worse than work, and worse even than no-work. At least when you’re browsing ESPN.com, you feel bad about it. Yammer happens at work, and it sounds like work — you can always tell when someone is writing an email, IM or Twitter, because their typing is so much faster and noisier — so people think it is work, with one crucial exception: it may not get work done.
I’m not sure I buy the talk about collaboration. I’ve seen passive-aggressive arguments happen over email and (less over) IM — Skype’s workrooms are the exception; they’re awesome — that could have been avoided or settled in a few minutes face to face; will Yammer be much different?
As it is, I have elaborate fantasies about outlawing the whole Internet for hours at a time, or even for an entire workday. When I marvel at how
a historical colossus like Theodore Roosevelt (definitive naval history of 1812, four-volume history of American frontier, a staggering number of slaughtered animals, U.S. President) or Honore de Balzac (dozens of coffee-fueled novels, written from midnight - 3 in the afternoon, while standing up) had time to accomplish so much, I usually attribute it to talent, servants — and no Internet.
Staving Off a Coup
But whether a shot at greatness is in anyone’s cards, I don’t have the guts to pull the plug on email, IM or Yammer for even a minute: there would be a coup, and Cynthia Pang would mount my head on a stake outside the Dexter-Horton building by the end of the day. I think a lot of executives who are asked about IM or Yammer agree to it for the same reason: they don’t want to seem like Scrooges or Luddites, and they’re not sure they could stop anyone anyway. And truth be told, we want our Yammer too.
Gentle reader and Dan Fabulich (who is, by the way, mutantly productive and far less curmudgeonly than I am) what do you think? Is Yammer good or bad for actually getting work done? Once we actually start using Yammer, we’ll report back on the results. Right now I’m not sure — but I’m excited to use it anyway.
(Flickr credit: soldiersmediacenter on Flickr)
September 7, 2008
Barack Obama and John McCain are going to spend the next two months arguing over the economy, mostly about how to foster innovation. The politicians blame politics. In last Sunday’s New York Times, Cisco & Google engineering executives talked about the same problem. They blame the lack of engineers.
Both are right. But the real problem isn’t that we have to be wiser or smarter. We just have to keep taking big risks. Taking big risks is where Americans have always stood head and shoulders above everyone else: get-rich-quick schemes have been our specialty. But now the new fashion among the professional risk-takers has been to risk very little.
$100,000 is the New $10 Million
Venture capitalists are racing to miniaturize themselves toward the vanishing point. One of my favorite bloggers, Fred Wilson, recently asked why not “back 10 teams at $25,000 each instead of one team at $250,000”? Just last week a Seattle venture capitalist boasted that “we are seeing impressive companies being built for under $100,000.”
To which one can only say: Really? Which companies?
Just do the math. Two engineers can last 12 months on $100,000, which is great for building a prototype, but often nowhere near enough to build an ambitious product, much less a business. Yes, hardware and software have become nearly free, but people have always been a startup’s main cost.
Spending Less, Doing Less
What’s usually happening is we’re spending less by doing less. Behind the steady drumbeat of startups, any TechCrunch reader can’t help but notice how whimsical many have become.
Trading college-girl gossip or graphing rock-band popularity is cool but we also need entrepreneurs willing to spend the time and money to f*** with the order of things. Rather than building game-changing technologies that can make an entire segment of the economy better, most startups are using what’s already out there to create a new media site. Silicon Valley, meet Hollywood.
What’s Really Scary: Nobody’s Scared
Everyone knows that last quarter was the first since 1978 that a venture-financed company didn’t go public. Mid-stage capital dropped 15%. Late-stage investing is now cashing out entrepreneurs before their companies have made money. And what’s really scary is that nobody’s scared.
Bill Gurley says an IPO isn’t worth the Sarbanes-Oxley headaches. Others are just waiting for the market to tick up. But if those were the real problems, we’d see more accretive acquisitions. Instead, even YouTube is struggling to make money for Google.
Most entrepreneurs don’t even aspire to build a self-sustaining business. Among the 25-year-old entrepreneurs I know, that goal seems as dated as the Brezhnev-era Red Army.
You Want to Get Funded? Think Small
It’s an attitude investors have encouraged. When I came of age in the 1990’s, VCs were always challenging entrepreneurs to think big. It helped shake us out of our navel-gazing reverie and into a broader world. Now, chastened by over-funded companies from the dot.com boom, many investors look for ways to cut an idea down to size.
Of course, some businesses don’t need a lot of money to get big. Others are happy to remain small. But there are big ideas that take time and money, and though there is still plenty of funding available, no one could deny the mood among Internet startups has changed.
Could Amazon’s Jeff Bezos show up on Sand Hill Road today to pitch a company that would lose money on software, on warehouses and distribution centers – for years? He might get his idea funded; he’d more likely get talked out of it. It’s so easy to nudge enterpreneurs — and people in general — toward smaller things.
What I’m Looking for in TechCrunch50
We can’t all be Amazon. But we do have to make sure that the volatile mix of money and energy – which occurs in only a few places, at a few moments in history — can still easily form around the big ideas, not just the small ones. This is why everyone is eager — why am I so insanely eager? — to see what TechCrunch 50 delivers: will startups debuting at tomorrow’s big conference make Silicon Valley’s place in the economy smaller or bigger?
The judges may argue over which contestant is the most clever or polished, but for those of you scoring at home, there’s room on the card for another column. Which startup is most likely to f*** with the order of things? We need a few of those too.
August 26, 2008
After reading a midnight-oiled TechCrunch post on Animoto, the new make-a-music-video-of-your-photos website, we decided to give it a quick shot for one of our own listings, in Bellevue (we had to use a Redfin listing because it’s copyright-infringement to take another broker’s):
I wanted to use Prince’s “Let’s Go Crazy” for the music, but we don’t have the rights for that either. As our lead search engineer & award-winning documentarian can tell you, it’s a problem for any aspiring film-maker.
Do you think this would make you more likely to look at a listing? And what’s the best song for this house?
March 25, 2008
April 24, 2008 addition: Redfin is correcting how it calculates the weighted average in the Redfin Advantage report.
Greg Wharton, the general counsel at my last job, liked to answer questions enigmatically. When I asked him if a software pawnshop in Florida was trying to buy us, he would smile and say, “answering that question now would obligate me to answer that question in the future.”
That can be a heavy burden to bear, especially when the question you’ve answered is a contentious one. Last spring, Redfin analyzed the MLS data available to all brokers to show that our home-buyers negotiated a better deal on a home — saving an extra $4,000 off the list price — over and above our commission refund. We called the total savings, of $14,080, the Redfin Advantage. We promised to make calculating it a regular thing, which meant that saying we saved customers money in one year would obligate us to admit it was a fluke if we didn’t repeat our performance in the next.
So when Redfin set out to evaluate our performance over the last 12 months, in a downturn that has brokers of all stripes competing ferociously at the negotiating table, I was sick to my stomach. As transaction volume grows, we should regress towards the mean. But the numbers came in for both Seattle and the Bay Area, and they only show the Redfin Advantage got bigger, with a smaller range of error (thank goodness!):
- Redfin home-buyers over the past twelve months paid on average 1.015% below homes’ asking price, while customers of other brokerages paid .087% below asking price.
- This difference in negotiating results saved Redfin customers nearly 1% of the home’s final price, for an average savings of $5,048.
- In addition, Redfin refunded each of these customers an average of $10,520 in commissions.
- The data is statistically significant, with p-values for each of the three counties we evaluated between .00004 and .02. To a statistician, this means there is less than a 2% chance that our results could be the result of chance. The p-value for last year was closer to .03 or 3%.
- It would be hard for us to exaggerate or fabricate this data, since other brokers can and will challenge the result. There was a huge brouhaha last year. One intrepid broker found an error on one transaction, and we immediately issued a .01% correction.
- Redfin’s customer satisfaction rate was again 95%, for home-buyers whose offers succeeded or failed. Our demographic broadened, with the number of high-technology customers dropping from 48% to 33% of our total, and the number of first-time home-buyers increasing to 45%. Unlike the negotiating advantage, the satisfaction and demographic results come from our own surveys, which are less reliable.
The report analyzes data from February 6, 2007 - February 5, 2008, based on the anniversary of our launch of our home-buying service, Redfin Direct for Buyers. We didn’t analyze LA, San Diego, Boston or Washington, D.C. because we hadn’t served those markets for the full year, and we didn’t have a statistically significant numbers of sales there either.
Because the negotiating advantage is consistent across different Redfin agents, different customers, different counties, different years, in markets that were healthy and slumping alike, it seems fair to conclude that the advantage stems from the Redfin business model itself. What does that mean?
Customers on the prowl for a deal are a big reason we negotiate effectively. The partnership we try to set up with customers gives them a more active role in negotiations and, because they
have the most skin in the game, they come to the negotiating table armed to the teeth with data from our site. Last year we tried to give all the credit to our agents, but now, we think Greg Swann was right: a lot of credit goes to our customers too.
We still think the results validate the skill of our real estate agents too, whom we pay customer satisfaction bonuses rather than commissions to avoid creating any pressure for customers to close on a bad deal. Alone among any national brokerages, we require our agents to have experience with at least 20 transactions before representing a client. Hats off to all our Redfin agents, and thanks for your hard work, now being recognized on TechCrunch, in our favorite real estate blogs and the local papers.
Many thanks to Redfin star Chris Glew for preparing the report, his first big business project. An anthropology M.A., Chris previously studied ancient Mexican turds and fabulous jungle-buried relics. In his interview for the job, he explained that the diameter of an empire’s tortilla-making griddles increased with its ability to enslave people in the fanatical construction of monuments (which in turn prompted us to expand Redfin’s Costco order.)
March 23, 2008
Michael Arrington complains again today that people are overwhelmed with email. Michael cites a venture capitalist who encourages people awaiting his email reply to befriend him on Facebook, but then admits he is even less responsive there.
“Someone,” Michael says, “needs to create a new technology that allows us to enjoy our life but not miss important messages.”
But if Michael wanted fewer messages, he could just switch to a private address without telling me what it is. Every time we write an email rather than call, or add another distant “friend” to Facebook, we choose a network over true friendship, communication without commitment. And usually, we’re choosing what we want.
This is a process that starts early: the New Yorker’s Adam Gopnik recently wrote about the imaginary friend his toddler talks to on her toy-cellphone, usually only to say that she’s too busy to talk to him.
And it began a long time ago. The critic Hugh Kenner speculated that the disembodied voices of modern poetry grew out of the invention of the telephone. What I grew up seeing as a way to reach out and touch someone, a previous generation saw as a paltry substitute.
And now that’s how I now see Facebook, as a paltry — but not quite dispensable — substitute. Facebook comforts us with the thought that we have lots of friends. And yet the prestige that this network offers is the opposite of security, that 8th-grade sense we got from knowing exactly who our friends were.
The “social utility” of friends on Facebook is different than other forms of friendship. Most of my friends’ Facebook updates have the quality of overheard cell phone calls: mundane, impossible not to listen for, really only half of a conversation, but also comforting. Someone stuck in Singapore for a year once told me that what he missed most was the English chatter of overheard conversations.
This is why I’ve stopped checking Facebook throughout the day, but then suddenly find myself, alone in the wee hours of the night, glad to see everyone there. The feeling it gives me was best described in Augie March: “Wherever it was dark there was this sound, continental and hemispheric, again and again, like surf, and continuous and dense as stars.”
Saul Bellow was writing about falling asleep to the chirping of insects, but now that sound is the buzz of our friends. Maybe the one-line updates of Facebook have just reduced communication to what we really need to hear, over and over again: “Are you there?” “Yes, I am (everything’s fine).”
(photo credit: Moriza on Flickr)
