I recently attended a private talk by Dr. Eric Clemons, Professor of Information Management at The Wharton School, at the offices of www.firstwivesworld.com, the first social network and community dedicated to women transitioning through divorce. He is currently creating a case study on the site. I definitely love their name!

My notes:

He avoids being an investor in companies he profiles/analyzes.

Quoting a panelist from a panel he moderated: “We may not do the deep analysis of traditional journalists, but we’re so wired. We’re a collective mind.”
“We don’t need fact-checkers. We don’t need editors”.

Is the internet a breakthrough in human communication?

Social networks still have norms, which constrain what you can do.

Superficial monetization of a social network with advertising is a failure, because it doesn’t fit the social norms.

In beginning of radio: there was no programming because there was no one listening. RCA owned a radio station and made radios. They solved the chicken & egg program by giving away thousands of radios in NY which were tuned to only 1 station, theirs. Then they could go to media guys, and tell them 100% of NY radio market is listening to RCA. Now we can go to Colgate and sell advertising.

Have you ever noticed that all the ads on the different channels run all at the same time? Because you agreed to be captive in exchange for free content.

BUT the net is entirely voluntary. It’s like showing up at a medieval faire.

Most attempts to monetize the net are ill-conceived at best to offensive.

British Airways used to have a promotion: if you buy a 1st class seat, you could bring your wife. Problem: people would bring their mistresses.

Facebook Beacon is making the same mistake. If I buy black lacy lingerie, 3 possibilities:
1) bought it for myself
2) bought it for wife
3) bought it for another woman

In all of these scenarios, I don’t want my wife / network to know about this.

My first wife left (rightly). She said, “During the day, I’m first in my class at Cornell Law. I come home and I do your cooking. Do your own cooking!”

Ultimate terror: 2:45am. If I need to whine, the only person who will listen to me whine is the reason I’m whining.

When I was 25 and my wife left, I was disoriented. It had been my life, my car. When she left, my network fell apart. We have a group that is in need but too embarrassed to ask.

I had grad students whom I paid to play Second Life, and another whom I paid to play World of Warcraft. One was a jock, who created a character called Sweetie. He would send her to bars, salsa with other characters, and then watch her be violated.

No one on a dating site wants ONLY a virtual relationship.

3 P’s of a successful online network
1) Personally relevant. If it’s not relevant, it’s just bad TV.
2) Participatory
3) Physical transition

The hard part of a social network is monetizing it.

How would you feel if a woman you met on First Wives World said, “I’m a therapist, and I want to be paid for providing you some counsel.” You have to be careful about violating norms.

I have a freshman, who has a company. You send him a text message, and he’ll forward them to everyone you know. E.g., when Heath Ledger died, I got 70 messages. Some other faculty said, they had to cancel classes, because everyone was either texting or crying. The students say they get 10 messages/hour, except Friday/Saturday night when they get 40 messages/hour.

The people we’re trying to capture are ‘digital virgins’. I want them to become digital residents.

A lot of people freeze halfway through the registration process on First Wives World. As soon as my activity online is linked to my real identity, I’m nervous.

We’ve done studies of the depth/loyalty of the average 19-year-old employee. They’re both cocky & ignorant.

The alternative to advertising is letting users design it.

Here’s what FirstWivesWorld should do. Tell ETrade: we won’t take your ads. But give us $0.5m to do research on needs of divorced women with money. Because we did the research together, you have an exclusive on this relationship. You cant get this knowledge from anyone else. This is not giving an exclusive on banner ads.

Bud spends $.75b on promotion. Kraft hasn’t gotten past the model of: we’ll sell a product the buyer doesn’t really like, but he’ll buy it if the price is low enough . We call this promotion, even though neither the buyer nor the seller is happy with the transaction.

Companies have both a promotion and an advertising budget. There’s not as big a pressure to justify ROI on the promotion budget.

The flush toilet and the elevator made cities possible.

The iphone may be as big as the automatic transmission.

If YouTube collapses the public broadcasting system, the culture goes away.

We are teaching people to use itunes as a coping mechanism. That is emerging spontaneously from the community.

Following are my notes on the Friday keynotes from the NY Web 2.0 Expo

Jay Adelson, founder, Digg

We’re about to add 90m Facebook users as registered Digg users.
Collaborative filters are key to monetizing of social networks

Ben Huh, icanhazcheezburger.com
LOLcats started out in primordial soup of the internet.
Every piece of web 2.0 content came from a user.
In 4/07, 8m page views/month. Had grown from blog to web 2.0 component, because it allowed people to build LOLcats.
100% user-generated content
8,000 submissions/day.

9/07: 15m page views/month
Huh and some other investors bought the site.
Our goal: make users happy for 5min/day
6 posts a day
9am ET start, when people come to work
Strict promotional guidelines
We normalize the system

Rules: we don’t allow photos of cat on a stove with the flame on, but it can be next to the stove
3/08: 37m page views/day
3/08: launched a network: ROFLrazzi.com . Just acquired failblog.com, which is growing faster than icanhazcheezburger
Now 100m page views/month.
8 sites.
5 FTEs who moderate comments, pictures.
We lower the bar for content creation. The lower it is, the better content you’ll have.

Shawn Fisher, head of strategy/M&A for IAC
Future of video games.
Instant Action is defining the $2b online core games market.
Overall video games market is $34b

2 types of video games:
-$7b in console based: $400 for hardware, $60/game. Add an extra $50/year for cost of ownership
PC is $150/year for online connectivity, and $60/game. Much cheaper because you don’t have console cost.

Only 8% of console titles reached 650K units (breakeven on avg. investment)
It’s an expensive product, takes a long time to produce, expsnvie for users…but high engagement.
We see room for breakthrough in this market. See see new category of games: hardcore games moving to the web. Most publishers won’t focus on this — too disruptive and cannibalistic.
Altenative: full and engaging video games that function 100% in browser.
Advantages: low cost, rapid development, entirely online distrution, high engagement, free for basic access
That’s what we’re building.

New brand :instantaction. First web-based videogame platform. Multi-player game. Console quality delivered in the browser.

We fund and develop original IP.
700K registered users. 30mins./day avg. time on site.
Over 127 countries
50% users in US, 50% outside. Core demographic male 13-34.

Dan Lyons, Fake Steve Jobs

Just joined Newsweek as a columnist.
As an old media guy, attending this conference is like attending your funeral in advance.
Started this in June 06
He put Fake Steve Jobs on hiatus when he saw Steve looking so sick.
Wrote book, “options”, on his secret life.
Started blog, RealDan, which everyone says sucks.
He started the blog because:
1) had free time
2) fear. I saw what was happening to the news business. I tried to get a job on the dot-com side of Forbes, but was rejected. I was 48, grey hair.

I wanted to parody both Steve and also blogging as a form. This was mostly fiction. This was a comic strip that evolved into news.

Some people thought I was steve and wrote to me asking for features.
In a few months, I had 90,000 people reading this. That’s more readers than I had at the first newspaper that hired me. Soon I had 1.5m readers.

Rich Karlgard (Dan’s boss) launches search for who fake steve jobs is. Dan told him who he was.

Brad Stone of the NY Times broke the story. At this point, at least 100 people knew about it, so it’s not surprising I was outed.

Why does it work?

Once I was outed, this still worked. The community really liked his stuff.
- Consume & create
- Fake Vladimir Putin: a character who lived entirely on my blog, who argued with fake Noam Chomsky.
- It’s a performance space

One of the best speakers at the NY Web 2.0 Expo was Josh Schachter of delicious, who spoke on Lessons Learned in Scaling and Building Social Systems:

BACKGROUND

Built delicious in 2003, sold to Yahoo in 2005. I just left Yahoo a few months ago.
Billions of page views/month.
4m users at time of sale

3 kinds of scale: technological, personal, and software.

Technological scale
- partition users into multiple sets (sharding, clustering). I built delicious into one big database.
- caching. Avoid going into the database.
- replicas. Must have multiple copies of the data.
- mysql issue: we got a 60x performance speedup by making some changes
- autoincrement: will hurt you later. Don’t do this.
- put proxy in front. Don’t let the dialup user take up your whole server
- sloppiness. Use an offline process to decouple interactive processes from the rest of the system.

Social Scale
- different features at different scales
- at beginning, make it easy for users to find one another. Don’t let them say ‘hi’ and see no one respond. Minimize barriers to entry and minimize transaction costs.
- as you grow, you have to design features to mitigate traffic. E.g., on delicious, the ability to follow your friends.

3 reasons a social app has value:
- utility, network effect, revenue
- Delicious initially focused on utility.
- have to provide value to the user *before* there are a lot of users online
- you have to provide these motivations in this order: 1) provide utility, 2) get a network effect, 3) monetize

For a long time, biggest apps on Facebook were Superpoke, etc. They have very little functionality, but a lot of users, because they are simple enough to spread rapidly.

App must be self-marketing without requiring sign-in.

Compare initial marketing vs. actual functionality. Initial marketing of delicious was: bookmarks for people with multiple PCs. But really, we became a search engine for bookmarks.

Half our traffic came from RSS.

Figure out drivers for infection. Firefox Extension was our biggest driver.
Choice of language matters: key to say ‘do not share’ instead of ‘private’, to discourage not sharing. ‘Not sharing’ sounds like something your mom would criticize you for.

Kids change their social network partly because it allows them to update the network to reflect their current status

Delicious doesn’t have a chat feature because I didn’t want the flame wars you see on wikipedia admin pages

Must prepare to deal with spam and abuse

Lengthen or destroy feedback loops.

If you kick off a spammer, you’ve taught them what they did wrong. But they’ll be back. So on delicious we let them use the system but didn’t let anyone see them.

When xdrive had problems with spammers, they just inserted a 20sec delay on downloading files. That frustrated them and they moved to a different system.

Make pretty URL’s; they’re easier to remember & forward.

We were one of the first sites with a public API. I used this as a tool to recruit people who might have built competitors otherwise

Scaling yourself. The first thing you do will be wrong. Iterate quickly.

Write down all your ideas. It’s good for future patent work.

If people in engineering have to read support tickets they’ll build around problems

Figure out user motivations

put the whole staff in the listening session. Measure and record everything.

Average user has 60 tags.
8% of users will use 12345 as password
Another few % will use 123456
And about 15% will use your domain plus their ID

His best observation: SMS is the next command line. The next 1b people online will only have SMS.

I met the guys from NutshellMail earlier this year at SXSW and immediately knew they were on to something. For all of the social networking, blogging, tweeting, Skyping and so on that I do, email is still the killer app of the internet. I spend the bulk of my day in my email client.

One of the most important productivity tips you’ll learn from systems like Getting Things Done is to minimize your inboxes. In other words, the fewer places you have to go look for new "stuff", the more productive you will be.

That’s why it’s always baffled me in social networking sites when people tell me they were getting too much email, so they turned their email notifications off. That’s not a productivity gain — it’s just the illusion of it by getting it out of your face. If those communications are valuable at all, then the more you can do to consolidate them in one place, the better.

Another challenge is web-based email. If you have a personal (or personal business) account at, say, GMail, Yahoo, Hotmail, etc., that’s yet another inbox to have to go check. Now, GMail does offer free POP/SMPT service, but many businesses won’t let you access other POP/SMPT services from their network (and besides, you may not want your personal messages coming in on your work computer). Last I checked, Yahoo and Hotmail both charge for POP access (correct me if I’m wrong). But back to the point… do you really want your personal email coming in to your work email client?

Enter NutshellMail.

NutshellMail creates a digest of message headers from your web-based email accounts and popular social networking sites. This has a couple of major benefits:

1. You can keep up with all your social networking and personal email from work without having to constantly go check multiple websites and without accessing them via POP3. You can scan the headers, and if there truly is something urgent and important that you need to respond to or handle, you can go directly to the appropriate inbox and handle it.

2. If you work for yourself, like me, and don’t have some of those concerns, you still have the benefit of consolidating all your social networking messages in one place — still in your inbox for convenience, but without the clutter of having low-priority messages directly in your attention field.

I’ve been using NutshellMail for a couple of months have been very happy with it — definitely a productivity boost in dealing with my social networking, and I see tremendous potential for its application for accessing personal email and social networking in a work environment.

In fact, I liked it so much that I agreed to join their advisory board and have been working with them on their product roadmap, launch strategy, business model, etc. NutshellMail is one of the main components in what I’ve been talking about regarding the need for social web aggregation. I see a strong potential exit strategy for them being acquired as part of a larger social web aggregation play.

The only "sub-optimal" experience I’ve had with it so far has been recurring problems with some of the social networking connectors, particularly MySpace (although given MySpace’s reliability issues, I’m wondering where the problem really lies — I think NM is having to code around MS’s issues). That said, the reliability seems to be improving — I haven’t had a failed connect in about a week.

NutshellMail was a finalist for TechCrunch50, and while they didn’t make the final 50, they were invited to demo in the DemoPit. They’ve also received some great coverage:

• Forbes (video)
• Killer Startups
• StartupMeme

Want to check it out? NutshellMail announced the opening of their private beta at TechCrunch50, so you can sign up now (may take a few days or more to get access — be patient). You might also enjoy reading their blog for some great articles on corporate email policy, virtual communication and more.

LinkedIn launched their blog in April 2007. One year later, how are they doing regarding community evangelism and social media participation?

I’ve set up a simple survey which I hope you’ll take a minute to fill out. For additional background if you’re interested, see my post at Linked Intelligence.

I could go into a long explanation about legal liability, etc., but Jeremiah Owyang said it perfectly on Twitter today:

Many bloggers I know prefer a blogging policy at work, as it helps to distinguish where the guardrails are.

From Jim Turner on Twitter:

Is it just my imagination or does Twitter sometimes ‘eat’ your tweets? Must [have] a ‘tweet tooth’ or something.

I have two new social media addictions thanks to SXSW. The first is Twitter (more on that in another post, but in the meantime, you can follow me); the second is Bitstrips.

Simply put, Bitstrips is a Web 2.0 application for creating comic strips. It enables people like me who have no artistic talent, but occasionally observe or think of something funny, to have a nicely-rendered visual expression of it. But what makes it really compelling is the social aspect of it.

For starters, you can create a character to represent yourself:

This is me	This is me on Bitstrips

Then you can connect with existing friends and use their characters in your strips. For example, I figured bLaugh creator Chris Pirillo would be interested in this, so I thought I’d drop him a line to tell him about it. Needless to say, he was already there and highly active:

You can also create characters representing your friends and then invite them to join.

Once you’ve done all that you can use your friends’ characters and the characters they’ve created to make strips of funny things that happened in real life. And before anyone gives me grief about this next strip, I’ll say that a) it’s a slight exaggeration, b) I cleared it with the star of it before publishing it (”Oh man, you could’ve made it WAY more unflattering than that. It’s perfect!!!!”), and c) no, the guys in the background aren’t any specific people - y’all go make your own!

You can also make images of celebrities. And you can edit your friends’ strips (well, not actually edit, but create copies of theirs which you can then edit):

Of course, including your friends and family in comic strips may not always go over well:

It’s incredibly fun to create the strips, and incredibly funny to read them. I also love that they build the tutorials in the application itself, for example:

They even use it to communicate company news:

That said, it is a 1.0 product, and it has, shall we say, quite a few shortcomings, such as:

Limited range of expressions…

Shortage of people who are actually funny…

Characters can only be human…

Lacking some seemingly obvious essential props, like musical instruments…

And phones…

Fortunately, they’re working on it…

Of course, some people have come up with some pretty creative solutions in the meantime (in case you’re wondering, that’s a stack of tables in the back)…

Well, that’s my review. Now just to think up an idea for my next strip…

Oh yeah… if you decide to check it out, feel free to add me as a friend.

In case you were ever wondering what social networking sites are popular around the world, here’s a graphical representation (click image for larger version):

United Online (Nasdaq: UNTD) is scrapping its IPO plans for Classmates Media, which includes social networking pioneer Classmates.com and the popular MyPoints consumer loyalty site. What particularly called my attention to this was the analysis of it over at Fool.com by Rick Aristotle Munarriz, which echoes some of the things I had to say about Classmates in our upcoming book, The Emergence of The Relationship Economy. Here’s what Rick had to say:

It didn’t hurt that Classmates.com is considered a social-networking pioneer, at a time when News Corp. (NYSE: NWS) is laughing its way to the bank on its MySpace purchase, and Microsoft (Nasdaq: MSFT) is bankrolling a suspicious investment that values Facebook at a whopping $15 billion.

Investors weren’t born yesterday. They didn’t need an Ivy League college degree to know that pioneer badges can be worthless. So what if Classmates predates MySpace, Facebook, Bebo, or Google’s (Nasdaq: GOOG) Orkut? If rings around the bark are all that mattered, Friendster and Tribe.net would be Wall Street rock stars.
…
Classmates blew it long before the IPO got shelved this morning. The site was in the right place at the right time, but it was positioned the wrong way. Instead of embracing the open-ended ways of the real stars of social networking, Classmates spent too much time as a walled community with little to offer those who weren’t willing to pay for access. The site had amassed user registrations 50 million deep over the years, but just a sliver of those were paying customers and active participants.

Here’s what I wrote in The Emergence of The Relationship Economy regarding Classmates and freemium business models:

Many users have criticized Classmates’ highly restrictive free functionality, which allows members to establish profiles, search for other members, and read public message boards; posting messages or contacting other members requires a premium membership. Other sites with similar models, such as Ecademy, have garnered similar criticism. While there is nothing inherently wrong with this business model, it does generate more customer ill will than those with less restrictive free membership functionality.

We recommend that unless compelling ROI can be demonstrated in other ways, companies offer a free level of basic membership that has sufficient functionality to keep people engaged on an ongoing basis. This not only creates customer goodwill but also generally offers increased value to premium members by having a larger pool of engaged users available for search and interaction.

Here’s the ironic part… Classmates knew this was a problem — they just didn’t know what to do about it. Take a look at this excerpt from their S-1 filing:

Although we have recently experienced an increase in the number of paying subscribers, this trend may not continue. Most of our paying subscribers elect to purchase our services as a result of a limited number of features. For example, we believe that our recently introduced Classmates digital guestbook feature is responsible for a significant portion of the increase in our new pay accounts since the end of 2006. If our social networking pay features are not as compelling and we do not stay current with evolving consumer trends, our free members may not subscribe for our pay features. Any decrease in our conversion rate of free members into paying subscribers could adversely affect our business and financial results.

This is a perfect example of why understanding the marketplace and what users will and won’t accept is so critical. Not getting this right has cost Classmates millions.