3by9

Stage6 closes - gotta love those well thought-out plans…

DivX, Inc., a digital media company, today announced that the Company will cease operation of its Stage6.com video service on February 28, 2008.

I was stunned to read it because two weeks ago they were encouraging people to upload video. I’m sad to see Stage6 go, it was my favorite place to watch movies. That said, I sadly agree with their decision to close.

I just think the way they handled it was messed up.

Stage6 was launched to showcase their Divx products. On the surface this might sound like a great idea, users uploading their content using their products. The problem was realistically weighing whether the advantages outweighed the disadvantages. Not only was there a concern of the finances involved with maintaining the services (hardware, allegedly a $1M a month Limelight bill, etc.) but they also had to deal with monitoring the videos to ensure copyrights were upheld.

There was a legality double whammy Divx had to deal with. People pirate their software, unfortunately. I am unsure of the percentage of people pirating their software but if any of those people upload their videos to Stage6, that creates a double loss for Divx. The point of Stage6 was to encourage people to purchase the software but the site also encouraged people to pirate the software.

Divx realized their plight and wanted to spin off Stage6 into its own company. They even allocated $4M to do this, but whatever plans they had fell through.

So why are we shutting the service down? Well, the short answer is that the continued operation of Stage6 is a very expensive enterprise that requires an enormous amount of attention and resources that we are not in a position to continue to provide. There are a lot of other details involved, but at the end of the day it’s really as simple as that.

Now, why didn’t we think of that before we decided to create Stage6 in the first place, you may ask? That’s a good question. When we first created Stage6, there was a clear need for a service that would offer a true high quality video experience online because other video destinations on the Internet simply weren’t providing that to users. A gap existed, and Stage6 arrived to fill it.

Then came all the other companies offering video services, in other formats. Did it make sense for Divx to spend significant resources on Stage6? No, Stage6 was causing a conflict not creating a viable compliment. Stage6 would have to change to seriously compete with the other video sharing sites.

There is a hidden problem with Stage6 shutting down…what about all of the sites that are dependent on Stage6? All the sites that have their videos embedded on their sites or have the option to view those videos? Those sites just lost a hell of a lot of content.

Users will have until Thursday to use the site. Yes, they gave a whopping 3 days notice. Now let’s see which video sharing company steps up to take advantage of Stage6 closing. There are many people struggling to find a comparable service, meaning no YouTube type service that degrades the quality of the video. Some of the videos on Stage6 are literally works of art, with hundreds of hours spent editing to make the resulting video a true piece of work.

And of course it could be the nail in the coffin for one of these newer services if the horde of people using Stage6 started using the new service all at once.

The moral of this story: take the time to really think a business decision through before implementing it. Look far into the future to see where this new idea could take you in a year or two or five. Look at both scenarios, what if the idea is successful, can we monetize it? If the idea fails what will we do?

Sometimes lies take over a year to surface

lie
–noun
1. a false statement made with deliberate intent to deceive; an intentional untruth; a falsehood.

I started with a definition to make sure we are on the same page. Note the definition: deliberate intent to deceive. If the statement is deliberate the person is making a conscious choice to lie, to try to deceive the person(s) they are interacting with. In my experience, lies come to the surface because keeping up the facade of the lie is too much trouble.

Of course sometimes the lie is told to bide time and that’s the lie I’m talking about today. The whopper that Microsoft told to delay their employees from knowing Valentine had one foot out the door when Vista was complete.

The contract called for him to start on September 11. Valentine surely told his bosses of this fact. And yet Microsoft did not announce his departure until September 5, less than a week before he started.

So why would Microsoft lie about Valentine’s employment status? In July and August, Microsoft’s programmers were on a death march to complete Windows Vista.

What was the lie? That Valentine was taking a new job within the company after shipping Vista. Unfortunately, the contract with Amazon was signed in June, the lie was told in August. Microsoft lying isn’t that big of a deal, almost expected some would say. Let’s not forget that Valentine went along with the lie. He looked his team in the face every day with the knowledge he was jumping ship. This is not one lie, it’s a string of lies maintained for months. I would imagine quite a few people were in on this lie. He worked for Microsoft for 19 years, seven of those on Windows. The lie shows how fragile things were for his team during that time, if they were unable to handle the truth. He was paid handsomely for his deceit:

The deal called for him to get a $1.7 million signing bonus, a $150,000 salary, another $500,000 bonus, and 400,000 shares of Amazon.com (now worth almost $30 million).

Makes one wonder how much he was making at Microsoft. That’s a lot of money and I bet you’re saying you’d figure it out for that kind of money, right? Well, if he could lie to people for months what stops him from doing the same thing to Amazon? Valentine wasn’t in the strongest position transferring because Vista has always been plagued with problems, even in beta.

That’s my point: a liar doesn’t make exceptions. Eventually a liar will lie to anyone to benefit his/herself. It’s only a matter of time.

I’m glad the truth finally came to light. I thought it was kind of odd that Valentine was being re-assigned at that time. It didn’t feel right….because it wasn’t. I suppose this would make a good Quofda question: in the same situation would you lie to everyone?

The Google, Microsoft, Yahoo Nursery Rhyme

Once upon a time there were three wolves in the forest
Microsoft and Google and Yahoo, the poorest.
Where Google had pizzazz, Yahoo was shy
Seemingly waiting and hoping to die.

Microsoft was the biggest wolf of the three
With claws and fur and teeth you see.
He worked all summer finding logs for the winter
But Google found the logs faster without getting a splinter.

Microsoft the wolf was powerful, big and resilient
But he hated that Google for being so quick and brilliant.
He secretly cursed Google’s name for showing him up
And vowed that one day Google’s time would be up.

When Yahoo the wolf limped back hurt from the hunt
Microsoft’s ears perked up when he heard that wolf grunt.
The snow came down quick and poor Yahoo was cold
So Microsoft chatted him up, a tale of warmth was told.

“Listen to me Yahoo, I know what does aile you
You want to keep warm, well I want you to be warm too!
I have many logs to burn and all the food you can eat
No more hunting for you, so just put up your feet.

Join with me and forever stay out of the cold
With us — friends forever — the whole forest could be controlled.”
And with that “friendly” talk the wolves hatched a plan
To share all their logs, all their food. And so it began.

Months went by and the teamwork was rough
Yahoo pulled them one way, and Microsoft had enough
He thought he could show up Google once and for all
But Yahoo’s strengths turned out not to work well at all.

Microsoft wanted to hunt but Yahoo wanted to talk
Yahoo would start to run but big Microsoft only walked.
They quarreled and fought like two dueling wolves would
And gathered one half of the wood they thought they could.

While this folly happened Google sat back and laughed
And thought about how those two wolves were trapped.
They’d work twice as hard and get half as much done
They’d walk much slower than Google’s fast run.

Google stuck to his instincts and minded his business
Because to him their partnership was just like Christmas.

The End

The greatest enemy of any one of our truths may be the rest of our truths

I was catching up on the new season of The L Word and there is an interesting storyline. Tasha is in the military, dedicated her life to the military, has an impressive career, but is under investigation for being a lesbian. Tasha’s desire to serve our country is honorable but at the end of the day, according to this storyline, which gender she decides to be intimate with is more important. She received discharge papers and to stay in the military, she has to prove the allegations against her are untrue.

She would have to live a lie.

That made me think about how many people I know live in a similar situation, but the consequences might not be as severe or living a lie is not as obvious. Think of the people who create alternate personalities online, where the reader would have no way of knowing the personality they begin to like over time is not real. Imagine meeting this person face to face, can you imagine the let down? The person who is mean, spitting venom online all the time but in person could never say those words. The person who is paper rich and cash poor. Let us not forget the person that makes every attempt to make their blog appear to have more traffic than it actually does.

Or worse, the person who begins to believe the lies because deep down, they want to be that other person so bad, particularly if the persona is more successful or accepted.

Be yourself because in the end, that is all we have. Even though Tasha is a great soldier, can she continue to be a good soldier if she has to watch everything does so that her relationship remains a secret? Her entire life becomes a battlefield, one wrong step and the game is over.

Just like putting an inappropriate picture online can get someone fired. Or some of the things writers publish on their blog could prevent them from getting a job because the employer took five minutes and Googled potential employees. The marketing department did their job (technically) and lied about a product’s features to get people in the store but will it be enough to keep people in the store? Which is more important, getting those people there or the consumers purchasing something (isn’t it the equivalent to those seeking Digg traffic)? Those investors start-up owners lie to in order to get the funds to take their business to the next level usually find out someone lied their ass off.

Doesn’t the truth usually come out? I have no idea where Tasha’s storyline is going but I am curious to see which path she decides to take. Shackled by a lie or free picking the truth.

The Future Is Movable

There’s a reason I didn’t use the word mobile in the title of this entry, and that’s mainly because when people think of mobile anything they think it sucks. They think it’s a scaled down, kiddy version of the real thing. This line of thinking was essentially correct up until recently, when products like the Samsung Q2 UMPC, Nokia N800 Internet Tablet, and Apple iPhone appeared and showed where mobile technology was really headed. Now you’ve got an entire computer the size of a Sega Game Gear, so is this the future?

Computing’s future is going to be split down the middle, with desktop-class machines getting faster and cheaper, and movable machines (laptops, UMPCs, iPhones) getting smaller and more connected.

As far as software is concerned, this is both a great and terrible concept at the same time. It’s terrible because now you have iPhone users accessing your web application from their phones and you feel compelled to slim it down and make it more iPhone-compatible. It’s a great concept because movable computing has spawned new industries, new niches, new ways to add value to someone’s computing life. People have a finite amount of time during the day, and they’re displacing old interests with things like Twitter and Qik. When people are doing something new instead of what they were doing before, there is now an opportunity in making that new activity as entertaining or productive as possible, for profit. Look at all the companies making money in the cell phone wallpaper industry, the ringtone industry, the “text 34554 to 3443 to get X sent back to you” industry. Yes, those are all million-dollar industries that didn’t exist a few years ago. These all sprouted up in response to the changing tastes and needs of users who now have computing devices in their pockets all day long. People can IM, text, and email their friends no matter where they are, not to mention take pictures, stream videos, visit websites, play games, oh and make phone calls. Each function that a movable device has is another opportunity to do something better, faster, or cheaper than the next guy and turn a profit.

Simple cell phone functions like ringtones, texting, and picture-taking have been created brand new companies around them, but what features that have yet to become ubiquitous?

• Mobile video.
• Mobile gaming with touchscreen controls.
• GPS in your cell phone.

iPhone SDK Coming In Weeks

I predict many new companies and software niches to pop up once the iPhone SDK launches in February. It’s going to be just a matter of time before people are shooting video with their iPhone and then performing iMovie-like editing operations on it from within the iPhone before directly uploading it to YouTube. It won’t be long before some really awesome games are released for the iPhone that have interactive controls far beyond what mobile games are currently employing. Mobile ordering products for stores like Starbucks.

Each new function that is launched will create a brand new company out of thin air. Then there will be 5 other companies created to compete with that market leader, and then you’ve got an industry that didn’t exist a year ago.

Strategy is important. Seriously.

Imagine you have a company. You work hard, amass a large following, decide to issue stock shares and try to do your best to run the company properly. How would you feel if you found out that a consortium of investors, with a 21 percent stake in your company, are trying to take over the board? What if you had a large online community but your members desire a change in policy that goes against your business model?

This is what happened to CNet and Facebook. CNet is in jeopardy of a hostile takeover and Facebook made a drastic mistake in their business plan. Let me explain.

CNet was founded in 1992, has 2600 employees and is easily one of the largest entities online. CNet has a problem finding ways to monetize their content, keeping their stock shares up and CNet has the “If I cannot do it myself, I will just buy it” mentality. They bought their way into niches they did not understand and their lack of understanding stagnated their growth. An example of a bad purchase would be Webshots, purchased for $60M in 2004 and sold for $45M in 2007. Buying a way into a niche only opens one door, maintaining it is twice the work. A similar situation would be purchasing an epic-geared level 70 World of Warcraft character and thinking the character will grant you the privilege of granting you a slot on the #1 arena team. The team would quickly realize you do not know how to play. Purchasing the character does not give you the skill just like purchasing a website will not guarantee the website will continue to be successful. As advertisers become wiser, spending more efficiently, large websites like CNet take a hit:

“While the online tech ad market has been growing in the 30 to 40 percent range for the past several quarters, our analysis suggests that CNet’s core tech ad business, which we believe represented 65 percent of total company revenue last year, is on pace to end 2007 down 3 to 4 percent.”

Facebook made a similar mistake. In the desire to increase growth Facebook opened their social network to everyone, a mistake that will remain a hurdle for the company. The headline drawing decisions made by Facebook lately would have been fine with their original core audience (college students), which Zuckerberg knows, understands and relates to. Older members saw through the alleged shady practices Facebook tried to implement, placing the company in an awkward position. The open network will continue to draw challenges Zuckerberg would not face with a younger crowd.

Business strategy matters. Do not forget that.

Obligatory 2008 Predictions In Tech

Everyone does a 2008 tech industry prediction post, and why stop the fun when I can join in my own special way?

Twitter != Business

Twitter has raised a few million dollars, mainly to build out their architecture and make sure their numerous outages of yesteryear don’t occur as frequently in the future. Geeky people like Twitter because it’s yet another medium that lets us get on our soapbox and pretend that what we have to say is interesting. Non-geeky people like Twitter… oh wait they don’t. I don’t know anyone who’s not tech-minded who even knows what Twitter is.

Twitter is essentially in the same boat as Meebo with regards to monetization strategy. People are used to IM being free, and perhaps somewhat ad-supported (but nobody clicks on those AIM ads anyway, in fact people go through great hoops to block them from appearing). Twitter is like sending SMS text messages, but they’re published on the web for anyone to see. People are used to paying a few bucks per month for sending SMS messages, but the act of texting has no additional cost. Twitter has already given away the cow in regards to sending messages, as you can send as many as you want for absolutely no charge. If they instituted some paid service levels regarding how many Twits you can post in a month (100 for $5, 250 for $10, etc.) then a lot of people are going to be upset since they’ll be charged for what they got for free before. If Twitter goes the advertising route, they could do Twit-advertising that gets blasted to phones every X messages you receive, but that’s bound to upset people as well who are on a pay-as-you-go SMS messaging plan. The folks behind Twitter may have to revert to simply showing ads on Twitter profile pages, but then you’ll have to deal with the Twitter API users who access 10x more Twitter data than normal web visitors. Ev Williams is a big proponent of creating a solid platform first and letting the business part take care of itself, but in this case I feel like Twitter has potentially tied its hands because all the killer features and uses of Twitter are already completely free.

Apple Stays Strong

Apple is in a position to really do some damage in the smartphone market, and perhaps the entire cell phone industry. The iPhone blows away all other cell phone competitors in terms of customer satisfaction my a ridiculous margin, so that means people are telling their non-Apple-fanatic friends about their good experience. This may not lead everybody to go out and snag iPhones, but if they don’t already have an MP3 player or are looking for a new laptop, Apple is solid in both those areas enough to warrant a second look.

As far as the iPhone is concerned, Apple simply needs to continue to push out quality software upgrades (with major upgrades every 6-8 months, hopefully one of those comes soon) and get people salivating for whatever the iPhone v2.0 is going to look like. If Apple decides to expand the iPhone line, they just need to be careful about hackers who can turn an iPhone Lite into a fully-fledged iPhone with some software upgrades.

Facebook Plateaus

I’ve always said that Facebook has no chance of surpassing MySpace, and my reasoning is that almost everyone who has a Facebook account also has a MySpace page, but not many people who are on MySpace are going to feel like they’re missing something by not also having a Facebook account. Everybody is on MySpace, and a subset of them are on Facebook as well. If you want to reach the most people, it’s MySpace you go to.

Facebook has made some major mistakes this past year in how they roll-out new features. The news feed feature upset a lot of people off, and now the beacon advertising fiasco has betrayed users’ trust once again. MySpace rarely rolls out new features, mainly because I can see them following the formula of “if it’s not broke, don’t fix it” which is a traditional mindset of a company leading its industry. Small tweaks here and there, a new logged-in homepage, less downtime, faster pageloads, these are all things that MySpace has rolled out successfully in the past few months. What they’re focused on now is business development and ad sales, and they do that extremely well (and have even pioneered some brand new banner sizes.) Facebook’s additions look like they’re thinking too hard in an effort to out-do MySpace, and in an effort to push things out quickly they stumble where it matters. Facebook still doesn’t allow users to customize the look and feel of their pages, nor do they allow you to see people’s profiles if you’re not in the same network or friends with them. Both of these features are the hallmark of MySpace’s user experience, which is a large reason why they are still the king of social networking. If Facebook really wants to compete with MySpace, then they need to give in and allow these features for their users.

37signals Hits “The Enterprise”

Jason Fried has never really been a fan of “enterprise software”, mainly because he thinks it’s crowded and overblown on the user experience’s side. When you combine a few of their products together and look at the featureset, 37signals’ offerings are very close to what companies are paying large amounts for. In a recent post they pondered where company intranets went, but the conversation quickly turned to “what my company uses” and a large percentage of big companies are still using Microsoft Sharepoint for daily collaboration. I could see 37signals building out an integrated suite catering to these corporate users, combining a few of their applications (Basecamp, Campfire, Highrise) along with some new functionality into a mega-package that they could then market to Sharepoint customers at a fraction of the cost. Of course that “fraction” would still be a lot more than they sell to consumers at via web-based versions, so they’d hit a pretty solid niche.

People are so easy to fool sometimes…

Jeff Gerstmann’s dismissal was all over the internet last week. A very unfortunate incident but it brings to light an issue that needs to be discussed, one consumers need to be aware of. There are definite conflict of interests with online entities.

The GFW Radio Podcast had a very frank discussion (MP3) about the conflicts of interest that happen in the gaming community. So did The HotSpot (MP3). Don’t get a warm and fuzzy feeling though. As much as I like these guys they know:

1) The people want to hear this.
2) Because they already know it.
3) And it will blow over in time.

It’s a tough situation if you think about it. Game developers and publishers are in business to make money. To have an authoritative site that focuses on gaming content cooperation from the gaming companies is mandatory. Are the gaming companies going to help a site spread negative press about their games? And pay them to do it by purchasing advertising?

I trust that these guys want to do a good job. I don’t trust cNet at all because their actions speaks louder than any words they can say. This conflict was bound to come out sooner or later and they have placed themselves deeper in this situation - they created this situation.

Yeah I said it.

Back in the day cNet had a crappy gaming site which couldn’t compete with GameSpot. They ended up purchasing zNet and they absorbed GameSpot. They also own MetaCritics and GameRankings. Let’s not forget GameFaq’s and Sports Gamer. And 1UP. Let’s not forget their print magazines. To be fair I won’t leave out the other biggie IGN owning IGN, GameSpy, the Planet sites, TeamXbox, GameStats, GamerMetrics, 3DGamers, etc. but IGN isn’t the one facing this scandal (but they are guilty of the same thing). And I doubt I listed all the gaming holdings for either company.

See, these companies know that people pay attention to the score over the words in a review, which is why they dominate in the game rankings area. If you read the GameSpot and IGN review for Kayne and Lynch, for example, you would notice the words point to a below average game but their scores are above average. That doesn’t make sense does it? To make things worse, on MetaCritics this is on the review page for the game under What The Critics Said:

All critic scores are converted to a 100-point scale. If a critic does not indicate a score, we assign a score based on the general impression given by the text of the review.

So much for a neutral stance. Here’s a clue, do that on your own reviews. Wait, they can’t, because the game developers are not only providing them the content they are also providing the revenue. Think about it, to do a review the gaming site could definitely wait until the game came out and purchase it. The previews? The betas? The interviews? They need the help of the gaming company and the gaming company wants that positive press out there. There aren’t enough games coming out to rely solely on reviews - the interim content for all of those web sites and magazines depend on cooperation from the gaming companies.

It is not smart to base a company’s content (ie: survival) on the people cutting the checks. If you think gaming companies are going to roll over and play nice when essentially they are in complete control I have a bridge I can sell you.

As well constructed as the plot is, one would assume the game would play smoothly. Unfortunately, it does not. Instead, it plays like a game that lacks focus and needs a few more months of polish. But then, most of the gameplay feels like it was pulled directly out of a game from the last generation, so perhaps more time wouldn’t have done any good.

Does that sound like a 7 to you? The reviewer can state they were honest with their review - that’s their out, honesty in their words. Obviously, IGN opted not to bite the hand that feeds them.

Unfortunately, things aren’t always the way they seem. One has to open their eyes and see people, companies, and situations as they really are.

What Internet Users Really Want

TechCrunch, one of the most well-trafficked websites documenting the tech industry, gets over 5 million pageviews per month (source) which comes out to about 166k pageviews per day. That’s about one third the pageviews Fleshbot (NSFW) gets per day which is the adult brand within Nick Denton’s Gawker Media empire. I only put these two together because Fleshbot is simply one adult blog within the gigantic masses of all the other adult blogs and sites on the web, and although it only has the tiniest fraction of adult Internet mindshare, it still does some serious traffic, far surpassing the largest blog in the Web 2.0 world. Now compare Fleshbot’s traffic to Perez Hilton who does over 6 million pageviews a day, and you’ll see yet another huge gap.

The Tech Industry Is Like A Puddle In The Web’s Ocean Of Opportunity

When entrepreneurs and investors like to talk about the biggest Web 2.0 “wins” — MySpace, Google, YouTube, Facebook, Flickr, Skype — they’re not really talking about companies within the traditional “Web 2.0″ space but the ones who used web technologies to power something outside the scope of the tech industry. Everybody has social networking profiles. Everyone likes to see funny or viral videos. Everyone likes the ability to talk to others around the world for free. Everybody has photos they’d like to share, or likes to view their friends’ photos. Technologists within the web industry may think of Flickr as the champion of various web technologies, but that wasn’t the reason they were bought. Flickr had an appeal to people who weren’t techie at all, they just wanted a great place to share their pictures. YouTube may have brought video sharing capabilities to the masses and brought about the Flash Video revolution, but the most popular YouTube videos of all time are simply funny or dumb videos that are interesting to normal people who don’t care about Flash Video or the technologies that made that video view possible.

For companies that are entering the web industry now, clamoring to announce their startup at one of the launchpad conferences in front of their fellow geeks, my advice is to look at the scale of your audience. Many say that the best way to create an application or a website is to think about it in terms of if you were the target audience and user, but I don’t completely agree with that. If you’re a geek and you’re creating a company and you want traffic and revenues to soar, then your best bet isn’t to target one of the smallest audiences out there, aka, other geeks. TechCrunch does 160K+ pageviews per day and they’re essentially the loudest voice in the web industry, so scale that audience back and think how hard you have to work to win over even a small percentage point of those users if you’re targeting tech-savvy individuals.

On the other hand if you’re interested in a larger slice of the pie, try creating a service that gets out of the tech arena and brings some value to what the other 99.9% of web users are viewing daily. Not everyone knows what an RSS feed is, let alone Ajax, Ruby on Rails, “mashups”, or anything else you might be thinking as being interesting. Mainstream users shop online, view funny videos and stories, and keep their social networking profiles up-to-date. Keep that in mind next time you see a company built around the idea of mashing service X with utility Y, where X and Y have yet to be proven.

3by9 Podcast #5

Scrivs asked: If you couldn’t use your current skill set, what makes you do whatever you do, what would be your next line of work? We had an interesting time attempting to answer that question, cruising along talking about people, when Mike drops a “bomb” about his “life plan”.Prompting Scrivs and I to say, “Whaaa?!?!”.Resulting in Part 2 of the podcast. Scrivs was speechless several times, Mike is very determined with his “plan”, I said I was “done” several times but you’ll here me say, “but Mike….” and you know what? That’s not the most important part. Want to know what the most important part is?Scrivs and I learned we have a mini Robert Scoble in Mike.And here are two recipes for the drink Black Widow.Download Part #1: Click here (right-click/save as)Download Part #2: Click here (right-click/save as)