BJ Fogg

I’ve added the BJ Fogg Blog to my blog role.

I consider BJ a good friend. He is one of the most honest and approachable people I know. I love his passion for changing the world. I remember meeting him a few years back at an industry event and we kind of hit it off.

We’ve keep in touch the last couple years and I’m happy to see his new company YackPack garnering awards and industry recognition.

BJ has a Ph.D. from Stanford and teaches there. He is the author of a great book, Persuasive Technology, and founder of YackPack, a very cool audio messaging company.

Persuasive Technology: Using Computers to Change What We Think and Do (The Morgan Kaufmann Series in Interactive Technologies)

Music Kiosks

At CES I saw something about a music kiosk that allows anyone to record audio CDs or download audio content to their mp3 player at a retail location.

Early on at LDS Audio we explored pre-loading iPods with audio content, but we found that the pre-loaded content would be erased when someone hooked up their iPod to their own computer and registered it.

Does anyone know if there is a way to pre-load iPods with audio now, without losing it later, or how these Music Kiosks will work. Will they allow you to copy mp3 files onto any mp3 player (including an iPod) without messing up the home computer connection?

eWeek has an interesting article about the concept of Music Kiosks and what Starbucks and other large retailers are doing/considering doing.

One very interesting point the article makes at the end is that college students and recent grads seem to have little interest in music kiosks, since they can go online and get all the content they want at home.

But I’m not sure that older consumers would like kiosks either, since hooking up an mp3 player to a kiosk might be difficult.

Any thoughts? Has anyone tried a music kiosk? Was it a good experience? Bad? What would make it better?

Google on a Slippery Slope

I’ve always loved the purity of the Google vision to provide fast access to all the world’s information. The Google team has always seemed to care more about the user experience than about making money.

But today I glimpsed something that scares me and makes me wonder who is in charge at Google anymore. The pioneers who built the search engine were purists. But the settlers who are being hired at Google by the hundreds are probably more driven by making money than anything else.

For years I’ve watched Google provide a better user experience than Yahoo and MSN who have been far more willing to compromise the user experience with between 3 and 5 sponsored links before you get to see any natural search results. Plus, they sometimes don’t make it as clear as they should where the links are coming from–so users can distinguish ads from normal search results.

Today I saw for the first time that Google has caved into to whatever internal pressure this is for driving revenue growth, and they have really compromised the user experience.

I saw a Google search results page that showed 3 sponsored links above the natural search results. Here’s the screen shot.

I generally think that Sponsored Links above the natural results get a 2-4% click rate, while Sponsored Links on the right side of Google, the column that doesn’t both me as a user, get 1-2%.

So let’s do some math to see the revenue impact of this poor decision. (It could be huge.)

Google made about $6.1 billion last year, approximately half from their own site and half from their AdSense network. So let’s say that of the $3 billion in ad revenue from their own site, maybe 30% (a total guess) came from the top two sponsored links above the search results (the “obtrusive ads”) and 70% came from the right side links (the “unobtrusive ads.”)

So now, the top unobtrusive ad will become an obtrusive ad, and will probably get 1% more clicks than last year (when it was unobtrusive).

I once read a study that estimated the percentage of total searches that result in any paid click was something like 13%. (That may be off, I’m trying to grab that stat from memory.)

So if one ad moving from the right side to the top increases it from 13% to 14%, it will actually increase Google’s overall site revenue by about 7%-8%.

So $3 billion would become $3.21 billion.

Or this year’s site revenue which might be $5 billion (again a total guess) would become $5.35 billion.

In the short term, this is a huge win for shareholders who are going to see more aggressive revenue growth.

But in the long term, this makes them more vulnerable to startup search engines who are more concerned than Google is now with the user experience.

I hope this is a test, an experiment, and that Google will get enough negative feedback (from people like us) that they will abandon it.

This is a slippery slope. If this drives revenue and all the Google insiders cheer, what is to stop them from adding a 4th sponsored link above the natural search, or a 5th?

And if they really want to make a lot of money, how about displaying an interstitial ad every time any Google user clicks on a natural search result, before they get to the destination site?

Google could make trillions with that strategy!

Time Constraints and Portfolio Strategy

This post may only be interesting to the few die-hard believers in business incubators. During the bubble, everyone wanted to jump in and start an incubator. But most failed, and failed quickly.

So here I am in 2006 running an internet business incubator. Our plan is to use our small staff to test different ideas, see what sticks, and then to invest seed capital (from $20,000-250,000) in the ideas that seem to be the most promising.

Each company then needs to either get to cash flow positive on that initial investment or generate enough traction and revenue from customers that the company looks interesting to angel investors or VCs.

It is hard enough to do that with one company. So why would any incubator team be able to do it with 5 or more at a time?

That’s where my portfolio strategy comes into play. This is my theory and I’m betting that it will work.

If our portfolio companies are built on the same core concepts, such as content acquisition, indexing/search, internet marketing (as the primary way to get customers), and online community building, then we don’t have to be good at everything. In fact, we just need to be great at a few things and then we can share “best practices” with the team members in each startup.

Our primary content businesses are:

1. LDS Media (parent of ldsaudio.com and ldslibrary.com)
2. mp3books.com
3. worldhistory.com
4. new genealogy company (to be named)

All four need to acquire content, make it accessible and usable, bring in visitors, and then get our visitors to become members of our community, interacting with one another, contributing content, tagging content, and spreading the word.

But content today means so much more than text. In the early days of Ancestry.com we were just acquiring genealogy records. But now you have images as well as audio and video, and customers expect it.

So we are launching Blastyx, to produce and get online distribution for “renegade videos.” We are also acquiring a Web 2.0 saavy web development company, a blogging network, and a podcasting/PR business. We are already developing an enterprise scale SEO technology that we will use to manage tens of thousands of keywords for our companies.

Blastyx is hiring very skilled audio and video and blogging folks, so that we can produce/distribute media in various formats for our customers and get massive online distribution of that content.

All these companies will provide valuable resources to all of our portfolio companies.

But how should I spend my time? That’s the scarcest resource of all for an entrepreneur/investor.

As I’ve thought about how I should personally spend my time in an effort to help all of my portfolio companies, I’ve concluded that I should focus on visits to universities, and try to accomplish the following with each visit:

1. Visit the technology transfer offices to see if Blastyx can use our video and audio story-telling skills to shine a light on the coolest research projects that are going on at the university.
2. Find out if the university (library, press or archives) has any audio or video content that we can license and commercialize.
3. Meet with the leading historians on campus so they can point us to sources that we need to include in worldhistory.com and give us input on this project.
4. Visit the business school to find out more about local angel investors and to invite the people running the business plan competitions to invite all the winners to post their plans to www.fundinguniverse.com
5. Speak to business students/computer science students about entrepreneurship or internet marketing, keeping my eyes out for potential recruits or investment opportunities.

While on these trips, I suppose I should also meet with local genealogy societies and experts to see how we can best work with them.

And if we launch an online education company sometime soon, then I suppose I could look for subject matter experts and instructors for it as well.

I’d like to think that a successful university trip could add significant value to each of our portfolio companies, if I can use LinkedIn and other networking efforts to set up the meetings listed above. I hope to try my first university trip in February or March.

Any suggestions? Which universities would you visit first if you were me?

Seeking an Entrepreneurial Culture in Utah

Last week, Provo Labs held its first mixer for its portfolio companies. We are hoping to develop a culture of knowledge acquisition and sharing, a culture of networking, a culture of innovation.

We gave out free copies of Tim Sanders’ excellent book, “Love is the Killer App” and we also talked about John Hagel’s new book “The Only Sustainable Edge” that in some ways may become the bible of Provo Labs. His earlier book “Net.gain” which discussed the power of online communities influenced my strategic thinking at Ancestry.com more than any other book.

So thanks John, for two timely books!

If Provo Labs can focus on “accelerating capability” in each of our portfolio companies and in our parent, and make sure that all of our employees are in as many “knowledge and idea flows” as possible, then we should be spectacularly successful in the global economy.

I got on my soapbox about some problems I see in Utah’s business culture. We have lots of entrepreneurs with great ideas, but as companies start to grow, they seem to get sluggish and very inwardly focused. Then they stop innovating and stop being competitive.

Josh Coates (who attended our mixer), a Silicon Valley purebred, says the problem is either arrogance or ignorance or both. Large dominant companies tend to become arrogant and they stop learning and innovating. For a while it doesn’t matter, but over time they lose their edge and get overtaken.

But

Years ago it was widely held that Broderbund/Family Tree Maker was the arrogant company in the genealogy industry. They were doing tens of millions a year in software and data sales with no competition. Genealogists didn’t like the fact that they were collecting data from users and selling them on CDs.

We met with them early on (as we were launching Ancestry.com) and basically they didn’t want to partner and felt that they were going to bury us.

Our internet business model basically undercut all three of their revenue streams: software, genealogy data, and collections of user files.

We gave away free online software (and later free downloadable software), we provided tons of free genealogy data online and a low-cost subscription for premium data sets, and we created the Ancestry World Tree from submissions by hundreds of thousands of genealogists, and we promised to keep all user-generated content free forever.

After we started growing fast, people told us that the Family Tree Maker people started holding “kill Ancestry” meetings each week. But I think arrogance prevented them from realizing that we were delivering better products and better value to customers and that their old model wasn’t going to win the day.

Josh says ignorance is the second cultural problem in Utah.

For me that was nicely illustrated at the recent CES conference. One of the biggest consumer internet companies in Utah that has hundreds of employees didn’t send a single employee to the conference.

I met one employee who had taken vacation days and paid his own way to Las Vegas so he wouldn’t miss out.

But if Utah companies don’t send employees to the most important industry conferences, then ignorance of the rapidly changing technology landscape will make them unprepared for competition.

Google Buys Radio Ad Company, To Enable Online Purchase of Radio Spots

Google is experimenting with print ads, and now makes this very significant acquistion in the radio advertising space. I believe the time will come that marketers will be able to reach virtually any audience, in virtually any medium, by using a Google service to purchase placement for their ad.

Early reports have suggested that the Google print advertisers haven’t been overwhelmed by success. But they’ll get better. And a lack of immediately success won’t stop Google from trying to automate the purchase of radio and later TV advertisements.

And why stop there? Google will certainly get into outdoor advertising, buying up digital billboards and bus signs, so that from your desktop computer you can buy ad placement anywhere.

If you were Google and had hundreds of thousands of customers spending billions of dollars a year to get their message in front of your audience–why wouldn’t you offer other advertising services (print, radio, TV, outdoor, yellow pages, and pay-per-call) to these same marketers? I think that is where things are heading.

Utah Geek Dinner tonight!

Provo Labs is a supporter of DevUtah’s Geek Dinners, great networking events for both developers and entrepreneurs.

DevUtah’s next Geek Dinner will be held at 6:00 this Tuesday night (Jan 17) at the Miller Business Innovation Center on the Salt Lake Community College campus (9690 South 300 West, Sandy).

There will be two short educational presentations by accomplished attorneys who will discuss legal topics for geeks. Nathan Nelson will talk about legal aspects of selling your software concepts, starting your own software development company (code shop), or becoming an independent developer. David McKenzie will discuss popular myths about software patents and copyright ownership relating to contractors.

We will also have a brief mini-presentation by Dave Turnbull from SoftwareFor.org, who will talk about some of the successes and failures of the last release of “Software for Starving Students”, which had over 25,000 downloads in just a few days.

The event will be catered by Panache Catering. Each attendee is required to contribute $7 to help cover the costs. Attendees are strongly encouraged to prepay burnsadria@hotmail.com via PayPal, although cash and checks will also be accepted at the door.

Please RSVP here

Keyword Density Tool in Firefox

I just discovered a new feature of Firefox that I love. You can right click on any web page and choose “Show Keyword Density” and type in any keyword or phrase, and instantly see a nice keyword density report that covers Title, Meta keywords, Body, Headers, Links, Bold, and Meta description.

Having this functionality embedded in the browser will be a real time saver for SEO-saavy web designers and copywriters. Kudos to the person that added this feature to Firefox.

I’m not sure what the ideal keyword density is these days (I remember hearing that it used to be about 5%-8% on body text) but this little right click tool will help you make sure you don’t forget to use the keyword in the title, use bolded text (for the keywords you are targeting), and headers and links containing the target words.

I’d like someone from Provo Labs to do a little experiment and run 10 or so queries in Google (for random keywords) and then run a Firefox Keyword Density report on the #1 results for each query, and then put the data in a spreadsheet and send it around to our team. Then I can blog the results here.

It is likely that MarketingExperiments.com or MarketingProfs.com or someone from SearchEngineWatch with a research focus has done something on a much larger scale. Has anyone seen anything compelling with the latest data on ideal keyword density and how important it is relative to link popularity?

2006 CES keynote transcripts

If you weren’t lucky enough to get to CES, or if you missed some of the keynote speeches, you’ve got to spend an hour or two reading the transcripts. Here are the links:

Bill Gates 2006 CES transcript
Howard Stringer, Sony CEO, 2006 CES transcript
Paul Otellini, Intel CEO, 2006 CES transcript (PDF format)
Terry Semel, Yahoo CEO, 2006 CES podcast
Larry Page, Google co-founder, 2006 CES transcript