Facebook and iPhone apps selling like hotcakes

And by that, I mean, one at a time.

You’d think that by now hundreds of popular Facebook and iPhone applications would have caught the interest of older established companies that weren’t able to move quickly enough to capitalize on these two most exciting development platforms.

You’d think that established brands with profitable business models would realize that perhaps one of the best ways to reach an audience of millions of potential new customers is through social networks and mobile platforms.

Today brought the news that The Knot, Inc., a 12-year old publicly traded media company that started out as TheKnot.com has acquired the #1 wedding application on Facebook — the Weddingbook. The Knot has roughly $100 million in revenue and a 10% profit margin.  It’s market cap is $229 million but it doesn’t have a very exciting 5-year stock chart

I think this was a very smart move by The Knot. Weddingbook was developed by WedSnap founder Kevin Lister in June 2007, a month after Facebook Platform launched. (I’m three degrees away from him on LinkedIn, but have never met him.)

I saw a several news reports and tweets today about the acquisition, but no one has speculated yet on the acquisition price. I hope it was a lot. Cleary Weddingbook represented a possible disruption to TheKnot.com, so I hope the founding team and investors were appropriately rewarded for how quickly they capitalized on the Facebook opportunity.

Also today, TechCrunch reported that the MindMaker iPhone app was acquired by German mind mapping application builder MeisterLabs. Again, no price was discussed. TechCrunch is aware of only three iPhone-app related acquisitions so far.

Maybe some highly publicized Facebook and iPhone app acquisitions will lead to even more acquisitions. Maybe the hotcakes will start selling faster now as large established companies shift their budgets from traditional advertising to more cost-effective customer acquisition strategies.

I think one of the problems is that so many of the early Facebook and iPhone apps have been rather silly and fluffy, and not easily connected to traditional business models. I mean, what major company would buy Vampires (although maybe the Twilight author could leverage that one) or Werewolves, Pass a Drink, Who Has the Biggest Brain, or Bumper Sticker? And what company would buy one of the plethora of iPhone fart applications

Actually, maybe there is a potential acquirer for each one of these, now that I think about it. Any major gaming company would be happy to own Vampires or Werewolves or any of the hundreds of other popular Facebook gaming apps. Pass A Drink, with its 7.6 million Monthly Active Users could be acquired by six alcoholic beverages companies with billion dollar plus market caps. Biggest Brain, of course, should be acquired by the maker of Trivial Pursuit or the popular Cranium game. And Bumper Sticker should be acquired by Cafe Press. And finally, the top fart application for the iPhone should be acquired by the maker of the Whoopee Cushion, which I just discovered through Wikipedia was invented in Canada in 1930, just in time to make the Great Depression seem a little less depressing (or more depressing in a way, if you were the target of the practical joke and were the one doing the depressing.)

I could see some of the large online dating sites SNAPping up (pun intended) leading social app developers who are going to be disruptive to their business models, but some apps won’t easily fit into a parent brand, the way Weddingbook does so nicely with The Knot.

I would not at all be surprised to see more and more marriages between traditional brands and online applications. It is increasingly difficult to launch a new successful social or mobile application, simply because there are so many thousands of apps already, so the space is become more and more crowded. So it makes a lot of sense for larger companies to be on the lookout for apps that already have initial traction, and could be rebranded or redesigned to fit into the parent company’s overall product or marketing strategy.

In other words, look for the hotcakes to really start selling this year.

Prediction: Facebook will be the largest social network in the world

I saw history in the making today.

For some reason, I was lucky enough to be in San Francisco for the Facebook f8 Platform launch event. This announcement was at least an 8.0 on the Richter scale. It was a whopper.

In fact, I haven’t come away from an event so excited since September 21, 1995, after attending the Online Developers II conference, also in San Francisco, when it hit me that my CD ROM publishing days were ending, and that I would soon become an internet entrepreneur. In the next five years, our team quickly shifted from publishing to online, launched Ancestry.com and MyFamily.com, and then went on to raise $90 million, acquire Rootsweb (and later Family Tree Maker / Genealogy.com) starting what has since become the largest genealogy company in the world. (Note: I left the company in Feb 2002 and have recently started a competing firm, with two properties: WorldVitalRecords.com and FamilyLink.com)

For me, that journey all started at Online Developers II.

That story doesn’t necessarily have a happy ending for any of the company’s founders or even its early employees or investors. Like Ray Noorda used to say, “Finders Keepers, Founders Weepers.” Crossing The Chasm by Geoffrey Moore explains why pioneers (company founders and innovators) don’t often do well in the end, while settlers (who are usually better are operations) do. I’m actually fine with that, and reading that in Moore’s book was one of a dozen things that helped me move on emotionally.

Today felt just like September 1995 to me.

And it makes me wonder what the next 10 years might bring.

I sat on the third row and drank deeply of the kool-aid as Mark Zuckerberg, who turned 23 years old just 11 days ago, presented what may be the best business opportunity for internet entrepreneurs in the past ten years.

A huge new opportunity was presented to the few hundred people in the room, including 65 companies that have spent the last few weeks developing applications for the launch of Facebook Platform.

Facebook is inviting anyone to develop applications for their users on top of what Mark calls their “social graph”–the core of their service which basically keeps track of real people and their real connections to each other.

Facebook has 24 million active users (meaning they’ve used the site in the last 30 days–I like how they aren’t overstating numbers like SecondLife) and 50% of them login each day. Mark says the next most active social network is not more than 15%.

Last fall as I taught Internet Marketing at BYU we learned that a UCLA survey showed that 50% of college age females said Facebook was their #1 most important web site (even more than Google, Wikipedia, or anything else) and that 1/3 of college age males said it was their #1.

Look how many “addicts” Facebook has, according to Quantcast. 63% of visits are from addicts. eBay is only 56%.

Facebook is adding 100,000 new users per day. That’s 3% growth per month. And the fastest growing segment is over age 25. At this rate, they’ll have 50 million users by the end of this year, and 75% of them will be out of college. I read just on paidcontent.org that Facebook is the fastest growing social network in the UK, and today Mark said that 10% of Canada’s population is using it.

With 40 billion pages view per month, Facebook has passed eBay in page views, and is now in 6th place, just behind Google.

So this is no small thing for a 3 year old web site. Facebook is absolutely for real. I like Facebook a lot; while I can’t stand MySpace. Facebook is clean and nicely designed and architected. MySpace in my opinion is messy and mostly full of garbage. Facebook is a real social network for real people. And it is really, really popular.

And it’s growth will be dramatically accelerated by the Platform announcement. If Facebook is adding 100,000 new users per day with its own few simple applications (like its photo sharing, a very simple service that has given Facebook twice as many photos as all other photo sharing sites combined), what will happen when thousands or tens of thousands of developers start building apps in Facebook and marketing them to more users?

Facebook will reach 50 million, then 100 million, then 200 million users, and beyond.

Rather than continue to try to develop features within its own proprietary, closed network, basically keeping all of its users to itself (and kicking out widgets they don’t like, like MySpace does), Facebook intuitively gets the concepts that are so brilliantly discussed in Wikinomics (which are so non-intuitive to old school business types), and has chosen to open up its network for all to participate in. Because they embrace the winning philosophy, they will win.

Application developers can now have access to core Facebook features, such as user profiles and user connections, and even publishing to the News Feed, all with the control and permission of Facebook users. So if a Facebook user chooses your app, it will show up on their profile for all their friends to see, and they can enable that app with a single click, and so your application can spread virally to the 24 million other users.

When Facebook has 100 million users, in the not too distant future, having the ability to develop an App in their system will almost be like being able to get a link on Google’s own home page.

Can you imagine Google ever doing that? No way. They have too much at stake. Their $147 billion market cap couldn’t take it. Google’s philosophy was to not be evil. But I think Facebook’s philosophy is a decade fresher and even more in line with where things need to go than even Google–a company that I admire more than any other.

When Clayton Christenson spoke at the first Open Source Business Conference (again in San Francisco) about three years ago, he spoke about how the LAMP stack has provided a powerful low-cost platform for companies to develop applications on top of. Linux, Apache, MySQL, and PHP enable companies to develop applications that used to cost millions, but by building on top of all these projects, companies could move “up the stack” and focus on providing unique value that wasn’t in the stack already.

There are more and more free layers being added to the stack all the time, powerful services that can be embedded in your own new applications, like Skype, Maps from Google or Microsoft, storage and utility computing from Amazon, and video layers like YouTube and Google Video.

When anyone develops an application on top of the LAMP stack, like a CRM system for example, they always risk being disrupted by someone who provides that for free on top of the already existing stack.

Any new open source application or creative commons layer can be added to the stack, which might commoditize that application and put some companies out of business, but then that enables everyone else to again add more value on top of the stack.

This process continues, and all the while the consumer benefits greatly, and developers can continue developing innovative and valuable services on top of the ever-growing application stack.

The way I view the Facebook Platform announcement is this: the LAMP stack has just been extended by the huge and growing “social graph” that Facebook is opening up to the world. (It’s not completely open, because you have to develop apps within Facebook, but it’s a start in the right direction.)

Now, instead of application developers having to each build their own web site and try to get people to find it and use it and share it, the viral marketing of any good application site will come right from the Facebook interface itself. As users adopt new apps, they will spread quickly through the network.

Mark made three big announcements. 1) Applications can be deeply integrated with Facebook 2) Distribution of the applications will occur through the network, and 3) The business opportunity Facebook is providing will give 100% of advertising revenue (for third party applications) and 100% of transaction revenue to the application developers.

Now that is the true spirit of Wikinomics.

VPs from Microsoft and Amazon were present to express their support for the Facebook Platform. Microsoft will enable application develop with Silverlight and Popfly, and Amazon discussed how its web services enable Facebook Platform apps.

The CEO of Slide mentioned that the Platform developer wins big, but that applications developers also have a huge business opportunity here.

Microsoft’s market cap is $280 billion. But the top three application developers on Microsoft’s platform have a combined market cap of $40 billion.

I don’t think Facebook’s market cap vs it’s application developers will be nearly that lopsided. In fact, the way they are treating their own applications versus Platform applications makes it a pretty level playing field. Facebook users can deselect apps they don’t want to use–even Facebook’s own apps–and sign up to any other.

The core asset Facebook wants to own, extend, and leverage, is the social graph–who is connected to whom.

It is even possible that some future Facebook app developers could end up with a greater market cap than Facebook–if they permanently maintain the 100% of revenue going to the partner model. For example, a MMORP game built into Facebook might someday have 10 million users paying $10 per month, or $1 billion in revenue, when Facebook might at that point have $500 million in advertising revenue. (Reportedly it will make $150 million this year.)

Okay, not likely, but maybe possible.

The cool thing is that the marketing costs for these application developers will be basically nothing. All viral. All courtesy of Facebook’s users.

One of the self-serving reasons why companies like Google and Amazon create so many APIs and web services is to get a vast community of developers doing R&D for them and prototyping applications to see what works best. Then, they acquire the ones the like best.

Facebook will certainly be in a strong position, once it has a liquid currency, to acquire some of the most interesting application developers using its Platform.

If you haven’t read it recently, read Chapter 7 of Wikinomics, “Platforms for Participation” in the context of today’s announcement.

Here are a couple quotes.

“The winners in this evolution will be companies that can create the most comprehensive incentive frameworks to adequately reward all stakeholders.” (p. 207)

How about letting them keep 100% of their ad and transaction revenue? That’s quite an incentive.

“Winning in a world of cocreation and combinatorial innovation is all about building a loyal base of innovators that make your ecosystem stronger.” (p. 210)

Like I said at the beginning, I felt very lucky to be invited to this event. I got the invitation because we invested in YackPack last year, which is one of the companies that is launching its application within Facebook.

I didn’t see anyone else from Utah there, partly because every internet entrepreneur and marketer in the state was probably attending Seth Godin’s speech in Salt Lake City, which was probably very good.

If you are from Utah and went to the Facebook f8 event, please comment here or email me. I really want to connect. I think we need a Facebook Platform Developer Community here in Utah.

I searched LinkedIn tonight and found 140 Facebook employees, board members, etc, on LinkedIn. I’m 2 degrees away from many of them. But then I searched for “facebook api” to see how many people in my 2 million + network have any experience developing for Facebook and only 1 person came up.

Hopefully there will be some developer forums that emerge quickly so that more people can get guidance on how to proceed.

So here is my final thought. I’ve been pretty fortunate in my career to kind of see the big waves and trends coming and to get positioned to take advantage of them. I think I have pretty good instincts, because my brother Curt taught me to read everything (and he buys me new books from Amazon almost every month) and to go to conferences all the time. I already mentioned the transition from CD ROM publisher to Internet Publisher. After reading Net.Gain in 1998, we created Ancestry.com’s user generated content strategy (it became our most popular database) and launched MyFamily.com which was really an early social network for families. At our peak we were adding 20-30,000 new users per day. Unfortunately, our investors stopped supporting that free site because it wasn’t making money. Doh.

After reading an article in Industry Standard in 1998, I decided to attend the first ever affiliate summit held in New York City, where Commission Junction, Be Free, and LinkShare all presented. We chose Be Free, launched our affiliate program, and over the next few years, affiliate marketing was our #1 source of new customers at Ancestry.com.

In the last few years, I blogged before Google’s IPO that it would disrupt Microsoft by offering free software (including Office apps) and said it will one day pass Microsoft in market cap. And, more recently, in my latest example of prescience, I blogged about Lindsay Campbell of Wallstrip after her first day as anchor, and suggested that she might one day rank up there with Soledad O’Brian and Diana Sawyer, and now CBS paid $5 million for Wallstrip, and Lindsay’s career will soar. Way to go, Lindsay!

The only reason I’m reciting these past predictions is to try to lend a little weight to my next prediction: that Facebook will become the #1 social network worldwide (and the first to get 1 billion users–I love Facebook mobile, by the way) and that thousands of entrepreneurs will become extremely successful by developing to this new platform.

I hope that Facebook won’t be acquired. I hope it will go public and become the next major Internet company along with Google, Yahoo, Amazon and eBay. Another hugely profitable company that can potentially acquire lots of other great smaller companies.

I like Mark Zuckerberg a lot. I met him tonight as he was just visiting with lots of the individual companies supporting the launch event, and thanking them for their support. He was very genuine. I can see him in 10 years with the influence of the Google founders and in 20 years with the influence of Bill Gates. He is just getting started. At the recent Startup School, he advised startups to hire coders — even in the marketing department — and he talked about time he spends thinking about philosophies and how at this young age his life is not cluttered with things and family responsibilities.

Can you imagine in a couple years when Facebook has 200 million users worldwide, with half of them logging in every day, and a 25 year old will be CEO of this company? I can’t think of a parallel in world history where someone this young had this much influence. Oh wait. Alexander the Great.

Ok. I’ll stop now. It’s 2:40 am. And my post is going on and on and on, and all over the place.

But I’m serious about this Facebook Platform. Check it out. Mark’s philosophy of openness is an open invitation to co-create something remarkable with him and his 24 million users.

Quantcast getting better and better

I’m a huge fan of Quantcast. I’ve blogged before that it may be the best free tool for online marketers.

And now it’s even better.

Two weeks someone showed me that whenever you are looking at a web site, to see how much traffic it has, that there are two arrows that PREVIOUS and NEXT, so if you are looking at the 100th most popular web site, you can click on NEXT and see the 101st most popular.

So I spend a couple hours scrolling through the 200 most popular web sites, looking for those that appeal to an the demographic our company is targeting. So I wanted to find very high traffic sites that we could advertise on, or partner with somehow.

I found a dozen excellent sites that I had not heard of before.

But now, on the Quantcast home page, you can now easily see the top 100 highest traffic web sites, and then the next hundred, the next hundred, and so forth.

I can’t wait till Quantcast allows you to enter in your audience profile and have it show you all the sites that match your audience that you should be advertising on, and then enable you to purchase ads quickly on those sites.

I wish Quantcast would buy the old Top9.com web site, with its thousands of helpful categories, and update it with their current data. Top9.com became one of the very popular web sites for marketers years ago. It was powered by data from PCData.com, then it disappeared. Here is a snapshot of Top9.com from the Way Back Machine.

When I worked at MyFamily.com and our properties were ranked us as one of the top 50 web sites in the world, we had plenty of capital to pay for services like Media Metrix, Netratings, and later Comscore. These services cost tens of thousands of dollars per year, but gave us tremendous insights into media buying and affiliate recruiting possibilities, as well as some competitive intelligence. I especially liked the reports on Netratings that could show us where our competitors were getting their web site traffic from.

A couple years ago I blogged about Five Things Most Entrepreneurs Can’t Afford. This was one of my most popular posts that year. The second item on the list was “third party measurement services” like those I’ve mentioned above.

Amazingly, Quantcast provides most of the value that these super expensive measurement services offer, and it is disrupting the industry at the perfect time–Comscore has filed to go public and Hitwise was just acquired by Experian for $250 million.

Quantcast isn’t going to make money selling their measurement data. Paul Sutter, the cofounder of Quantcast says that audience measurement is a few hundred million dollar market, but media buying is a few hundred billion. Quantcast is planning to help marketers reach their niche target markets through the use of their data. And I’m sure they’ll get a portion of the media buys, as marketers and web site publishers use their tools.

This is going to be very exciting to watch.

With Quantcast raising $5.7 million in venture capital in March, and with thousands of sites signing up for their free “quantified publishers” program, their data gets better and better.

Comscore has filed to raise $86 million in their IPO (see the Comscore S-1 ). I wonder how hard that will be given what Quantcast is now doing to the industry. I suppose Comscore could change its business model, and do the same thing Quantcast is planning to do. But it is always harder to steer a large ship in a different direction. So in the new world, Quantcast would clearly have the advantage since they’ve been designing this business model from the ground up.

Smart entrepreneurs will spend many hours mining the Quantcast data looking for marketing/advertising opportunities among the thousands of high traffic web sites whose demographics and psychographics match their own.

These are good times for entrepreneurs.

(One other fun web site, a mashup called Attention Meter, lets you see data from Quantcast, Alexa, Compete, and Technorati.)

International search engines for genealogy

World Vital Records most popular international search page is our German Genealogy Search page. According to Overture, there were 1045 searches on the Yahoo Network last month for “german genealogy” and 292 for “germany genealogy.”

After Germany, our most popular international search engines are England, Ireland, Australia, Italy, France, Austria, Scotland, Wales, Hungary, Sweden, China, Slovakia and Brazil. Interestingly enough, I’ve noticed Slovakia has recently been one of the leading sources of international traffic to my personal blog site, paulallen.net.

As we begin to enable our site visitors to share content with each other and to connect with other researchers, the popularity of our international search engine pages will grow.

We also invite libaries, archives, publishers, website owners and authors worldwide to contact us if they would like us to index their content and make it available to our growing audience of worldwide genealogists. We pay higher-than-average royalties to our content partners, as well as to our online affiliates.

We are doing all we can to keep our overhead costs low so that more people can afford to access online family history resources than ever before. With Google Book Search scanning millions of public domain volumes and with FamilySearch‘s digitization of the famed Granite Mountain Vault in the next five years, so much family history content will be free. There will be valuable collections of exclusive, proprietary content that people will pay for, but many more will be able to enjoy the family history hobby with just an internet connection.

We are currently designing a second web site and a business model that is designed to prosper in a world where much (if not all) genealogy data is free. That is a daunting task for those of us who launched the first online genealogy subscription site (Ancestry.com in April 1997) and then watched as hundreds of millions of dollars of subscription revenue were generated over the next ten years.

Our World Vital Records site will be subscription based and our forthcoming site (soon to be publicly announced–the domain name starts with FAMILY) will be free and supported by advertising and other revenue streams.

We appreciate every new customer who purchases a subscription on World Vital Records — I wish I could call and thank every one of you — because it gives us the resources we need to continue to develop that site, with its international databases, and to launch this new site which we hope will provide a value service to millions of family historians.

Internet stock investors: Bambi on Google

If I were an active investor in internet stocks, I would read everything that Bambi Francisco has to say, especially about the large internet companies. She has amazing prescience. I’ve been reading her for columns for years. Today she has an excellent post at AlwaysOn.

She has so many connections and so often has the inside story; but it’s her analysis that I like the most. Something she can do because she has been covering the industry for so long. She’s the Mary Meeker of internet journalism. If Mary blogged, I’d read her religiously too. (Mary was the #1 rated investment banking analyst of internet stocks for several years running. She wrote a report two weeks ago about the future of online advertising and how Google will benefit from the purchase of YouTube.) On Oct. 13th, the Wall Street Journal said Meeker values Google at $500 per share.

So back to Bambi. In her post today, Bambi explains how revenue follows eyeballs–even now, even years after the bubble burst.

Audiences and ad dollars always meet. I recall years ago, when search was considered a commodity.

Companies like Inktomi moved into the caching business, while others — Yahoo (YHOO), Lycos, Excite, AltaVista, etc. –quickly morphed into portals or were buried in other entities. The ad dollars would flow abundantly to portals, and transaction fees to online retailers, so most believed. Back in 2000, nearly $3.8 billion went into display ads vs. $109 million in paid search in the U.S., according to eMarketer.

Last week Google’s stock went on a tear. It hit a 52-week high this week. The market cap today is $145 billion. Compare that with Yahoo’s $33 billion and eBay’s $44 billion.

Bambi told 8,000 investors last Wednesday that she had turned bullish on Google only after it bought YouTube, because now it would be a leader in the social networking and video space, which has huge traffic share online but a very small percentage of advertising revenue so far. Like search back in 2000.

Social networks are estimated to attract $280 million in ad dollars this year, according to eMarketer. Online video-sharing sites are estimated to attract about $385 million. EMarketer estimates that $15.9 billion will be spent in online advertisements in the U.S. this year. That means social networks and video-sharing sites only attract about 1.8% to 2.5% of total online ad spending.

Investors who paid attention to Mary Meeker’s report two weeks ago or Bambi Francisco’s comments last Wednesday might have gotten into Google before the recent run.

But more importantly, since I’m a firm believer in the Warren Buffett, Charlie Munger approach to investing (make only a few bets in your entire life after reading and studying all you can and getting to know the company as if you were its owner, and then stick with those bets over a long period of time), I would keep an eye on Google for the next 5-10 years. I believe it will be worth more than Microsoft within a few more years.

In May 2004 I predicted Google would be worth more than Microsoft within 10-15 years.

In February 2005 I updated my forecast and listed 7 reasons why it wouldn’t even take 10 years.

Today I would guess that it will take less than 5 years and perhaps even only 2-3 years before Google is worth more than Microsoft. Acquisitions may play a role; but more importantly, each project that Google has launched (and has often been criticized for because they don’t become #1 overnight with them) is maturing. The pace of innovation at Google still exceeds all the other internet companies combined.

For the last decade, PC owners have found hardware prices plummeting but the cost of Windows and Office staying rather steady. It isn’t uncommon to pay as much or more for software than for hardware when you purchase a new PC.

But with Google’s recent moves in the spreadsheet and word processing space (when are they going to offer a free Powerpoint killer?), it won’t be long before we can buy a $300-500 PC without any Microsoft software on it and be as productive or more productive than ever before.

I’m not necessarily down on Microsoft. It will reinvent itself. Think about it. IBM is still worth $137 billion. It’s just a totally different business than it was 20 years ago. Microsoft will find its place in the post-Windows world, but it just won’t be making all the rules like it has for the last 10-20 years.

How many of you can live without Microsoft products today? And how many can see the time coming soon when Google will provide the OS as well as the free software applications that you and your team need to succeed? (And it will all be monetized through their most-efficient advertising engine.)

What do you think? And does it matter or not?

Since I write primarily to entrepreneurs, I’m especially eager to hear what Google’s strategy and success means to you as you make investment and business plan decisions.

Domino Rally Business Models

Josh Kopelman has a great post about Domino Rally business models that are so complicated and involve so many “ifs” that the chance for success is extremely low. It’s much better to have a Two Domino business model, where you know that if you do two things really well, you will be profitable.

I think WorldVitalRecords and 10Speed Media are Two Domino business models. WorldVitalRecords needs to acquire more content every day and bring more visitors to its web site every day. (That’s the same emphasis we had at Ancestry.com in the early years: content + internet marketing = subscription revenue.) So the focus for our team is clear.

10Speed Media is also focused on two things: getting more video inventory (more merchants) and getting more traffic to those videos (more affiliates). It is clear that video converts better than most other online advertising. We are generating sales and leads for our customers. So now it’s about doing more of what is working.

So how do you keep focused on execution, day after day?

For me, goals and daily metrics are the key to keeping me focused. If I don’t have access to the right stats, every day, it is so easy for me to move on mentally to the next thing. But if I have quick access to key metrics every day, my creativity stays within certain bounds–my ideas all center on how to achieve our goals.

I like to have my teams use Google spreadsheets and update their own key metrics every day so that the entire team can know exactly what happened the day before, and at a glance, they can see important trends.

I actually get some of my best ideas while looking at statistics. Especially when I know deep down that the stats should be better than they are. I sit and stare at them, while my mind digs deep to find in its memory bank past efforts that generated better results than our current efforts are generating. Sometimes I review lists of dozens of internet marketing tactics, or I comb through my gmail contacts or LinkedIn.com to think about companies, partners, friends who might be able to help us increase our results.

When I think we can do better, and concentrate my attention on things we could be doing that we aren’t, I can always come up with new things to try. When I don’t have stats that are telling me we need to do better, it is easy for me to get distracted by the “new, new thing” and not work on the present problems.

My favorite book about keeping track of key metrics is “The Game of Work” by Charles Coonradt. It is a very quick read and is full of great ideas that will help everyone keep score everyday of their results. When a team embraces this concept, work becomes more fun, and the chances of success increase greatly.

College Football Time of Possession

Some stats matter and some are rather meaningless. Like time of possession at college football games. It doesn’t matter much. At least you can’t determine the winner of a game by looking at that stat.

I grew up watching BYU football in the glory days of Marc Wilson, Gifford Nielsen, Jim McMahon, Steve Young, Robbie Bosco, and Ty Detmer. The passing attack was the best in the nation for many years.

Now, BYU is back, and but for a couple of unlucky finishes, BYU would be 6-0. Instead, we are 4-2, but the BYU passing and running attacks are great this year. The defense too. Quarterback John Beck had an incredible passing efficiency today.

I’ve always loved tracking passing efficiency. I think Steve Young set the all-time record for single season passing efficiency in the NFL with the 49ers. (Correct me if I’m wrong.) And today John Beck’s number was 245.84, a career high.

I’ve always wanted a passing efficiency calculator and I found one today on Cougarfan.com.

So today’s time of possession was SDSU 39 minutes, BYU 21 minutes.

But the final score was BYU 47, SDSU 17. And after the first half, where SDSU had the ball most of the time, it was 40-3.

BYU scored fast and scored often.

I thought about Google’s business model today while watching the BYU team operate. Google doesn’t care about time of possession. In fact, its business model works best when you go to the site, do a search, and then leave the site having clicked on a paid link. The faster you leave, the more profit Google makes.

For Google, that is a score.

In a pay-per-click business model, who cares about stickiness really? All it does is cost you more money because of bandwidth and computing costs if you have more visitors on your web site more often.

On the other hand, if you are an impression-based advertising model, then time of possession matters a lot. The more time visitors spend with you, the more ads they will see.

I’ve seen BYU score hundreds of times over the years in less than two minutes. So time of possession really is no big deal when you have a passing attack.

Of course, the best comeback ever in college football history was BYU vs SMU in the 1980 Holiday Bowl. (See web site that lists the 100 best college football finishes ever.)

BYU trails by 20 points, 45-25 with 2:55 to go in the game and scores three TDs in the last 2:55 to win 46-45. The last one, a 45-yard Hail Mary from Jim McMahon as time expires.

Can you even imagine a college football team scoring three touchdowns in 2:55? And BYU did it at the end of a bowl game, which is aptly named the Miracle Bowl.

I know I’m off topic, but it’s fun to think about this great bowl finish 26 years ago and to hope that BYU under head coach Bronco Mendenhall is moving towards creating another football dynasty.

Jumping into Online Video

I wrote an article for Connect Magazine’s September issue about skating to where the puck is going, not to where it has been, and I specifically addressed online video. I encourage companies to rush into online video, to take advantage of this new trend, and gain a competitive advantage by being an early adopter.

There are so many ways to take advantage of the low cost of producing and distributing online video: marketing, PR, training, recruiting. The conversion rate of video can be much, much higher than of traditional online text or banner ads.

Yesterday at the Provo Labs open house, one of my friends told me that Current TV — the cable TV channel that plays only user generated content — is now paying producers of video content. Current uses its web site so internet users can vote on the best video segments. Then the company plays the best ones on its cable TV channel. This is a remarkable business model!

A couple months back Revenue Magazine had an excellent article written by its publisher about how affiliates are starting to use online video to increase conversion rates. That is the trend 10Speed Media is trying to lead.

It works! This past week 10Speed Media launched several test campaigns and achieved an overall result that thrilled me. Our team met yesterday and decided how our test campaign results are going to affect our strategy moving forward. The results suggest we should launch more campaigns (I think we have 35 more planned) so that we can determine which industries and merchants to focus on first.

Last week, a MarketingVOX article reported that at OMMA a panel of advertising executives agreed that 15 second online video advertisements are most effective.

Today, a press release reported on a survey of more than 2,000 consumers, which among other things explored the length of video advertisements they are willing to endure based on the size of the screen they are watching: cell phone, iPod, computer, vs. television. Here’s an excerpt.

For the first time consumer receptiveness to advertising by device and screen size was explored. Applicants were asked what the maximum length of an advertisement they

#1 Need for Startups

In May 2005 Fraser Bullock, one of Utah’s brightest lights in the financial world (formerly with Bain Capital, now runs Sorenson Capital, helped with the 2002 Olympics turn-around), spoke at the Edison Conference in Salt Lake City.

Fortunately, I had my blackberry and I took extensive notes. Here are my notes from the middle part of his talk:

Management has to be adaptable. 1990 someone brought him into run home shopping network, pre-internet. Challenge was to get consumers to buy. They had a patent. Decided they had assets, what could they build that might be of worth. Built transaction processing engine for remote banking. Sold it to Visa International in 1994.

In fast moving tech environment, if I didn’t step back every 3-6 months to fundamentally re-assess our assets and the environment, I might be missing a paradigm shift. You need the discipline to step back.

We invested in a hardware company, but we saw the asset in the software they had developed. We invested in it, but are converting it to a software company.

Ultimately we have to produce revenue. That always comes down to distribution. Our 1990 company did deal with Visa, they distributed to thousands. For new companies, it’s distriution, distribution, distribution. Must be big, fast, easy. We always asked “Where is the money.”

Long term, to succeed, we needed to have a strategic competitive advantage. What makes you different? What will make people buy this? This is essential to any company we look at.

When you are looking at changing behavior (even if your product is twice as good), inertia is your worst enemy. Sometimes you have to be 10 times as good.

Looking at the handheld X-Ray system he said he’d like to use this on teenagers to find out what is going on in his life.

Utah more and more is coming of age. To our chagrin, most of the big tech companies we’ve built here have left. But we are getting more critical mass. And there is more capital now. The overhand is astonishing. If you have good management team and a distribution strategy, the money is out there.

We need companies here, and high paying jobs.

The key takeaway from Fraser Bullock’s talk that I have been thinking about lately is his strong emphasis on distribution as the key to revenue.

Without sales and marketing distribution channels, you cannot get to revenue.

I also have notes from a Greg Warnock UVEF speech last year where he said a recent survey of 400 Utah entrepreneurs showed that the average time to revenue for a startup company is 14 months.

I think that is WAY too long. I think that if entrepreneurs would focus on distribution, they could cut the time to revenue dramatically, and find much greater chances of success.

I have a friend who made the Inc. 500 list in the 1990s, with a couple million dollars per year in annual revenue. He told me once that his revenue was tiny until he found a new distribution channel: home school conventions. Once his company found success with home school conventions, they started going to all of them and the company’s revenues jumped dramatically. If he hadn’t found this channel, no doubt the company would have folded.

So it’s all about the channel.

At Infobases, the first company I founded and ran from 1990-1997, our two primary distribution channels were LDS bookstores that sold our CD ROM products, and then over time, our house mailing list, which eventually grew to nearly 150,000 customers.

There are different channels for different products and services. Each industry is unique. Entrepreneurs need to discover all the various channels and layers of influence that affect how decisions are made.

There are retail channels, network marketing channels, direct marketing, distributors and value-added resellers (VARs).

Since 1996 I have been focused primarily on the internet as a sales and marketing channel. My favorite “internet channel” is affiliate marketing, where thousands of motivated entrepreneurs and webmasters aggressively promote your products to all their site visitors or email list subscribers.

My next favorite channel is search engine marketing, a powerful channel where every keyword you purchase or get high natural rankings for becomes a sales person working for you 24-hours a day.

I don’t know if I’m abusing Fraser Bullock’s definition of a channel by describing the internet as a channel. But I do know that many if not most of the pureplay internet companies from the mid-90s have expanded over the years to become multi-channel retailers.

Except for potential channel conflict, which can damage a company, there is little reason for a company to stay purely within one channel. Companies want to expand, and finding new channels is a great way to grow your business.

But for startup companies, finding the first channel that gets you customers and revenue is the most important thing.

One unusual source that I rely on again and again to discover potential channels for companies that I am involved in is the Directories in Print, published by Gale. I own a 2003 edition. But local university libraries often have the latest edition on the shelves.

Directories in Print is like the yellow pages, which I also sometimes use for brainstorming potential channels and strategic partners. It covers hundreds of categories and topics. And within each topic, it lists industry organizations, associations, published guides, and all kinds of directories of members and companies. It’s a great starting place to get a feel for an industry.

Next, I like to research all the periodicals and publications that cover a particular topic. The Gale Directory of Publications and Broadcast Media lists more than 11,000 periodicals, newspapers, radio, TV and cable stations. The 1994 edition listed more than 50 periodicals in the genealogy industry.

The Standard Periodical Directory lists more than 70,000 titles in 230 subject areas. Oxbridge publishes several titles including the Oxbridge Directory of Newsletters.

I don’t have copies of any of these, but I hope to get copies of many of these reference books for the Provo Labs Academy Library. For now, we’ll just prepare a directory of the most useful ones along with their call numbers in the BYU Library.

I’ve blogged before about the great need for entrepreneurs to write things down. Intellectual capital, even the name and email address of a single person whom you once met, might be the key to your finding the channel that will turn your company into a success.

The Apprentice episode a couple years ago that showed two teams competing to attract brides to a single day wedding gown sale in downtown New York City ended with one team failing miserably and the other team selling dozens of gowns to the crowd of brides-to-be that flocked to the sale. The difference? One team knew about theknot.com‘s bridal registry database; the other team did not.

The team with a channel wins over the team with no channel.

So what is the #1 need for startup companies? Find a channel that helps you find customers and generate sales. Of course as Fraser Bullock also pointed out, you have to have a great product to break into a channel, sometimes 10 times better than the competition that is already entrenched.

But some channels, like the internet, are great for new companies with new products. I encourage entrepreneurs to use sales channels like eBay to see if they can sell their product to the millions of people who shop there before investing thousands of dollars in building their own web site. I also advocate setting up stores on Yahoo and Amazon and not merely relying on your own single storefront. Take your products to where the customers are. Use all the available channels to reach the maximum number of people.

The ebook publishing company that Provo Labs recently invested in has some great online channels, including Handango and Mobipocket, with more coming soon, including a major web retailer.

The Deseret News has become a great partner for the LDS Media products. And mp3books.com is working with FranklinCovey to make its audio books more widely available to its customers.

FundingUniverse.com is using Sprout Marketing to help identify influencers in the angel investing world and also to find potential strategic partners. Strategic partners that bring you into contact with their constituents can also be considered channel partners in a broad sense — don’t just think retail channels.

So if you are a startup, think long and hard about the channels that you are going to use to get your company to profitability. Spend more time on that than you ever have before, and your chances for success will increase.

Lingotek Needs Online Marketing/Sales Manager

My friend Tim Hunt, a venture-backed entrepreneur whose company Lingotek is located at the Novell Open Source Incubator in Provo, called me the other day and said they have a new job opening for someone in internet marketing and sales.

I told him I would blog about the new position. His company has funding, a lot of momentum, and they are generating lots of buzz in the translation industry. Many leads are coming in every day. They have a powerful business model that takes advantage of the network effect. The last time I saw an exciting and innovative business model in Utah was Logoworks. I think Lingotek has a bright future.

Here is the job posting he sent me:

As I mentioned on the phone we are looking to hire a Director of Online Sales and Marketing. Here are some background points on the company and a description of the position.

About Lingotek

Lingotek has created a new kind of translation technology called a Language Search Engine. It is basically a Google-like tool that runs in a web browser searching multilingual content. It differs from an internet search engine in two ways. First. it does meaning based searches instead of concordant searches like Google. If finds the same words with the same meaning in the same context in any language in the world. Second. it searches and indexes multilingual content stored on Lingotek servers from the community of translators around the world. It doesn