Monday, May 17, 2004

What can tech companies learn from realtors?

My wife is a world class real estate agent, working for Coldwell Banker in Burlingame. As a guy with marketing roots, I've been helping her with marketing initiatives. First, let me tell you a little bit about her practice. She covers most of southern San Mateo County and some of northern Santa Clara County. This includes towns like Burlingame, Hillsborough, Redwood City, Redwood Shores, Belmont, San Carlos, San Mateo, Foster City, Pacifica, Portola Valley, Menlo Park, Palo Alto, Los Altos and Woodside. She focuses on residential real estate, including single family homes, town homes and condos. If you are curious, her web site is located at

In the process of helping Heidi, I've learned a great deal about what constitutes state-of-the-art in residential real estate marketing. There is much that technology companies can learn from the real estate business. I'll cover one area now and get back to this in subsequent posts so this doesn't turn into a white paper.

Most importantly, relationships are everything in the real estate business. Most people find agents through referrals. So how do you build a clientele from a standing start? How do you get people to recommend you to others? These are fundamental questions, for a realtor or for a start up. Realtors accomplish this by using direct marketing (print and online) to establish a regular dialogue with their referral network. They also write a lot of notes and constantly send gifts of value to reinforce referral behavior. We all know that these activities are useful for tech companies, but few start ups engage in them effectively. Why not?

Why is Yahoo on the Social Networking Sidelines?

What is Yahoo thinking? Well, first a little background. Social networks are proven viral growth engines. They connect people with each other and facilitate the creation of user generated content. Most of the leading social networking sites, including Friendster, Orkut, LinkedIn and Tribe, all had to reach a critical mass of users to establish the value of their networks. The externalities all had to be created from scratch.

Yahoo, on the other hand, already has a ton of the basic building blocks for a successful social network. They've got:

==> Users: last I heard, their user base was the HUNDREDS OF MILLIONS. Now that's critical mass.

==> Social networking data: Yahoo Mail, Yahoo Address Book and Yahoo Instant Messenger already contain the world's largest social network. Everyone that has an email address stored in their Yahoo address book, or email addresses in their Yahoo Mail account or buddies in their IM buddy list has already shared with Yahoo information about their social network.

==> Community tools: My Yahoo, Yahoo Groups, Yahoo Briefcase, Geocities, etc. All have the basic community building functionality any social network needs. It just needs to be tied together in a new interface.

==> Daily interactivity: People visit Yahoo daily to get essential information, including news, entertainment and communication with others online. Adding a social network would constitute a trivial adjustment in the relationship with users.

==> Monetization: Yahoo already has the sales channel and the expertise to monetize the value of user generated content from a social network, perhaps better than any other organization on earth.

So what's the hold up? It's ok for Yahoo to be follower, given their significant ownership of users, but how come they are so far behind? One can only speculate, and here are my observations.

Compare to Google. Google has Orkut, which was launched a few months ago. It only got off the ground because Google nurtures entrepreneurial and creative activity, however. If Google didn't allow engineers to spend 20% of their time on a creative endeavor, and one engineer over there hadn't devoted his creative development time to this project, Google would still be on the sidelines as well. I suspect Yahoo's culture is nowhere near as innovative and flexible. Launching a social network will demand that someone in Yahoo champion the effort and lead a drive to allocate resources to the activity. For a public company being driven by quarterly results for the last several years, even a few extra bodies can be precious. If you are public company and you don't have tight controls on this kind of activity, things can get out of hand. Still, this is why people leave big companies in favor of start ups. Plainly said, you can just get more done with less effort.

Bottom line: I'd predict that we will see a Yahoo social network by the end of 2004. Also, if Google can keep costs contained and their organization focused, they will be a powerful innovator in the Valley for years to come.

A Press Release is Not Positioning

I've had way to many conversations with start ups recently where I've had to explain what positioning means, so I'll post a brief description here. First, what positioning is NOT. Positioning is not a press release. It is not an FAQ. It is not a list of key messages. It is not a competitive landscape. Positioning is statement which describes:

==> to whom a company is selling (if b2b that typically includes industry/title/responsibilities, if b2c that typically includes demographics/psychographics);

==> the problem you are addressing, as the target customer would characterize it;

==> how your product/service uniquely addresses this solution, including how it is different from the competition.

Once positioning is agreed upon, then an organization can develop messaging, which are the words that the company uses to communicate externally. The best way to do this is to develop a messaging bible which includes various descriptions of the company, including a press boilerplate, 50 word description, 150 word description, elevator pitch, etc.

So how many of your companies have written positioning statements and a messaging bible?

Why a blog?

Have you ever gotten into a conversation that shook you, woke you up, motivated you? What's better than a great conversation that creates energy for the people involved? Few people have these conversations often enough. This blog is an experiment to see if I can make it happen more often. I'm hoping to discuss company strategies, marketing and technology, and current events in business. I hope to read your thoughts as well. After all, I'm looking for CONVERSATION! :-)