Monday, December 29, 2008

How to handle corporate crises that stem from user generated content (UGC)

I wanted to share a paper that I co-wrote with fellow students while we were MBA students at Kellogg. The paper covers how a company should respond to crises that are a result of user generated content. With the speed at which information is now disseminated on the internet, companies need to be prepared for situations where employees and customers can create a firestorm with a simple blog post or video upload (example: Comcast guy sleeping).

It's kind of a long paper, so if you want to jump to the meat, the heart of our conclusions start on pg. 14.

Click on the below link to read in a bigger window.
Corporate Crisis Management of User Generated Content

Tuesday, November 11, 2008

Monday's got you down?

Cross-posted on CoNotes blog here: http://www.conotes.com/blog/mondays-got-you-down

Having connected thousands of job seekers with startup companies, we have seen some interesting trends since we have launched. The two that stand out have to do with the day of the week and time of day that individuals tend to seek jobs.

1. I am not sure what happens during the weekends that make people realize they are unhappy with their current job, but Mondays are the most popular day for looking for a new job. 20% of our visitors search for a new job on Monday. Tuesday's and Wednesday's are the 2nd most popular days to search for a new job, with 18% of our visitors coming on each of those days.

Job Applicant Trends by Day of Week

2. Noon-time PST is the most popular time to look for a job. Just over 7% of job searches on CoNotes come between 12pm and 1pm PST. The amount of job searches starts to climbs quickly from 9am PST (12pm EST), and slowly tapers off in the afternoon. I'm guessing a lot of people's day goes like this:
  • show up to work
  • read some emails
  • update Facebook status to "bored at work"
  • trudge to a useless status update meeting and munch on donuts
  • try to stay awake until lunch switching between Facebook and Excel (whenever anyone walks by)
  • lunch time!
  • realize hates jobs...there has to be something better than this...


Job Applicant Trends by Time of Day
As you would expect, Monday job searches at noon is the most popular time for people to look for jobs.

So if you hate your job, do these trends describe you?

Thursday, November 6, 2008

Kiva Loan Repaid!

I just got an email today that the small Kiva loan I made was repaid. Those of you who follow my blog will remember that I made that loan about a year and a half ago (post here). I just find it kind of funny that I get an email about full loan repayment to an Nigerian entrepreneur in the midst of an economic crises in the US where people making 100x Jeoffery's income can't even pay off their credit cards.

Below is the text I received from Kiva about the microloan made to Jeoffery:
This is an update on your loan to Jeoffery Ogbvo in Nigeria.

Jeoffery sells provisions like drinks,tomatoes
paste,milk,detergent,etc.He used his last kiva loan to purchase more
provisions to sell.With the profits he made from his sale.He used it in
the payment of his childern school fees.He has fully repaid his kiva
loan.He says thank you to all kiva lenders and Lapo microfinance.

Additional notes from Kiva:

1. This update was posted from Nigeria by Kiva's Field Partner, Lift
Above Poverty Organization (LAPO). If you appreciate this update, please
consider supporting another entrepreneur listed by this Field Partner.
You can view other fundraising loans of Lift Above Poverty Organization
(LAPO) here:

http://www.kiva.org/app.php?page=businesses&partner_id=20&status=fundRaising&sortBy=New%2Bto%2BOld&_te=j
It just makes you reconsider how we view financial stability in this world. There are a lot of things we need to reconsider and we should take what president-elect Obama said in his election night speech to heart.
"This victory alone is not the change we seek - it is only the chance for us to make that change. And that cannot happen if we go back to the way things were. It cannot happen without you."
Casting a ballot for "change" means very little -- especially in California where the same voters that overwhelmingly selected Obama also voted to ban gay marriage; what hypocrisy! We should all consider ways to make the world better. I will continue to support entrepreneurs through Kiva, mentorship, and ways I best know how; and I hope you will support your communities in the ways you best know how as well.

Monday, October 6, 2008

Lehman bankruptcy = $150+MM loss for San Mateo school districts

Wow. Over dinner, my friend, Mike, mentioned that Lehman's bankruptcy caused school districts in San Mateo county to lose hundreds of millions of dollars. I was shocked to hear this because despite hearing about all of the disasters on Wall Street, I expected any effects out in the Bay Area to be secondary effects.

How did this happen? By California state law, school district funds are held by the county, and San Mateo County had a large percentage of its assets held in Lehman bonds. In a cruel twist of fate, Menlo Park City School District, which had a AAA bond rating (highest possible rating), had just issued $30M in bonds to finance the renovation of its schools. So this school district, which had done its job in running an extremely fiscally responsible operation and, furthermore, had used its strong credit history to finance better schools for its students, was directly impacted by fallout on Wall Street.

Now you can argue that the county should never have had its assets held in such risky assets, but it is a sad story nonetheless. How do you explain to a 10-year old that in addition to their home being taken away by foreclosure, that their favorite teacher is being fired and that their playground isn't going get new monkey bars anytime soon?

News article here:
http://www.mercurynews.com/localnewsheadlines/ci_10632548

So I was thinking about how we got to this situation, and I keep coming to the conclusion that it was a horrible chain of selfish decisions -- none, in and of themselves, 100% at fault, but all contributing to the fallout. It's like a horrible example of Macolm Gladwell's Tipping Point gone right. The start was Clinton's policy of encouraging home-ownership for everyone and Greenspan's outrageously low interest rates. Then it was financial firms taking advantage of this cheap credit (basically free money) and the over-securitizing of financial assets. This inventivized mortgage companies to push mortgages (often illegally) onto unqualified home buyers. That was the tipping point. This basically sent the financial industry into overdrive as it had an overload of mortgages that it could trade and make money off of. This created a recursive cycle that resulted in the creation of trillions (with a T as in TONS) of dollars of fake value. Now those trillions of fake money are being unwound out of our global economy.

The problem that I have is that all these players knew EXACTLY what they were doing. It was not a situation where the blind were leading the blind. The major actors in this play were extremely intelligent and capable individuals. But the reward of payoff for all of them was enough to take the risk. Clinton and Bush had political gains in mind. Greenspan had a reputation as a financial mastermind to hold up (do you think it was a coincidence he left his office at the time he did?). The bankers all had huge bonuses at stake.

Now I don't have any problem with capitalism and free-market economics, but they are not a solution to everything. I don't think supporters of these systems ever consider the down-side cost. They only consider the upside reward. Yes, people who work hard and are talented should be rewarded for their good work. But, people who are by-standers should not bear the outsized responsibility for the cost. THAT is the problem with a free-market system; it never will be run truly like a free-market system. It's an option-call for the people with the biggest upside.

We are seeing exactly what happens when we try to impose too much of a free-market system on an economy. For that reason, I cannot support a McCain presidency. On top of the extreme incapability of Palin, McCain has always been a strong supporter of free-market economics. While he claims he is now all about reform, reform, reform, and maverickism (whatever that means), I cannot trust him to implement any reasonable reform.

Let's hope that Obama can be a voice of reason for the next 4 years.

Monday, September 15, 2008

Why I just can't vote for McCain-Palin

As a business owner, I should love the Republican Party. But I just can't bring myself to vote for the McCain-Palin ticket.

Top 10 reasons in no particular order:
1. The Bush administration is the worst thing to happen since New Coke. It has taken everything good about the Republican Party (small government, states' rights, fiscal conservatism) and thrown it out the door. McCain's statements make me believe we would be in for 4 more years of the same.
2. Sarah Palin.
3. Sarah Palin.
4. Sarah Palin.
5. Palin's response to why Alaska being close to Russia makes her a capable foreign affairs. "you can actually see Russia from land here in Alaska." That's like me saying I'm ready to go into M&A discussions with Oracle because I drive by their offices every day.
6. Sarah Palin.
7. Sarah Palin.
8. Sarah Palin.
9. Sarah Palin.
10. I want people in office that got their passport before 2007.

Tuesday, August 26, 2008

Facebook Ads...not so great.

Some of you have emailed me about the CoNotes Facebook Ads that you have seen. I'm impressed that you have even seen them given the atrocious click-through rate that I have been getting. I am going to assume the only reason my friends have actually seen the ads is because I have emailed them about 50 times about CoNotes. So they are pretty aware of my logo and can recognize it at a quick glance.

I have been running ads for a few weeks now, and below charts the CTR data for the past 2 weeks. I ran the exact same ad with different university targets to see if I could detect any differences in market segments according to which university a person went to. The results were pretty inconclusive as you can see.

Read this document on Scribd: Facebook Ad Report

I had a theory that there was an underserved recruiting market at schools not typically targeted by startups. Therefore, I was expecting to see higher click-through rates at the liberal arts and top non-Ivy schools. While the average CTR of liberal arts schools was the highest, I can't really make any statements as of yet. I think I will really have to wait for spring to come around to really make any conclusions -- when college students tend to make their employment decisions. Running the ad in the summer time probably hit the alumni at those schools, which is also another interesting group to study.

Nevertheless, despite any trends that are there or aren't there, the CTRs are horrible. The highest CTR I received from ANY segment was 0.2%. Social networks are known to average about 0.1%, so my results confirmed those results. It's well documented that the users of social networks are not in the right mentality when looking at ads. They are there to find out what is going on within their "social graph" and to find some entertainment through social apps. This is much different from the transactional mentality a user has when he/she searches for "digital camera" on Google.

On the positive side, the leads that Facebook does send me (note: this is in the single digits per day) are quality leads. So the targeting functionality is pretty effective. And I'm happy that I can target ads to very specific self-defined interests of users and their school affiliation.

But here is my advice to Facebook. If you are going to build out an advertising platform, you really need to target it to the usage pattern of your users. So what do I mean by that? Well let's think about the main reasons people use Facebook:
  1. To find out about people in their network (in their network = friends or just people "in their network")
  2. To share their experiences with people in their network
  3. To spend time on social activities (not necesarily in their network)
Given these 3 main usage patterns, Facebook's advertising platform should enable different kinds of ads.

For usage pattern 1, self-expression advertising is the most logical fit. People self-affiliate themselves with brands and products. You have Apple fan-boys, Audi tuners, and Jimmy Choo shoe lovers (I'm not totally sure why I know about Jimmy Choo). Why not let companies advertise through these people? It could be a mutually beneficial relationship where brands pick specific people they want to advertise their brand through, and those people are compensated because of the special role they play in their social network (e.g. "mavens" or "salespeople" as Malcolm Gladwell would describe them). Compensation could be money, but even better is probably special privileges to products from the company. Brand companies are very concerned about diluting their brand value, so they want to make sure the right people are promoting their brand (e.g. Kobe lost a lot of endorsement deals after his rape allegations). So to enable such a advertising platform, Facebook would need to build a mechanism for advertisers to find which users to advertise through.

Usage pattern 2 lends itself to more of a transactional advertising model. People often post pictures of food from a restaurant they ate at or write a post about the hotel they stayed at. These are all opportunities to enable transactional commerce. WOM advertising is strong, so why not enable advertisers to take advantage of the best WOM advertising -- through your friends. Imagine that your friend took a picture of an awesome slice of prime rib from Lawry's. If I hadn't eaten at Lawry's, I would either want to save it to a list of "places I want to try" or maybe even make a reservation.

Usage pattern 3 is pretty hard to create a specific advertising platform for. But it doesn't really matter, as this type of usage is actually enabled by 3rd party Facebook apps. Facebook app developers currently can put their own ads on their apps, but it would be helpful as a developer if Facebook enabled ads through their own API. Basically Facebook would create an inventory of ads that developers could tap into and place on their own apps. Depending on the nature of the app, developers could select the best types of advertisements.

The difficult thing about some of my suggestions are that they would be changes in behavior for advertisers. Advertisers like buying advertising products with defined standards and specs. However Facebook has an opportunity to really shape social network advertising if they build out the right advertising platform.

So that's it. Do I really have any evidence to say this would be much better than the current Facebook Ads or their even worse Beacon product? Not really. But I'm pretty sure it is a step forward.

Sunday, August 24, 2008

Which has a better business model: YouTube or Hulu?

There has been some conversation picking up in the past year about the online video advertising business model. Ad rates are rising, and clear distinctions in ad rates between user-generated videos and professional-content videos have emerged. Hulu is now able to command 2-3x higher ad rates as YouTube. For this reason, some people are saying that Hulu is a much better business than YouTube.

Yet I think people aren't really looking at the correct metric when comparing YouTube and Hulu's business potential. People are comparing views, ad rates, and engagement. I argue that the most compelling metric should be Revenue $ per GB. GBs are the driving variable cost units in the online video business (bandwidth, storage, and processing). Therefore looking at the return per GB makes a lot of sense.

Read this document on Scribd: Which is a better business: YouTube or Hulu?


Breaking down the #s, it is clear that YouTube has a much better business model. Despite the 3x higher ad rate for professional content, YouTube is able to generate 3x as much revenue per GB because the average YouTube video is 1/10th the length of Hulu videos, and YouTube videos are encoded in a lower-quality bitrate.

These #s may change if YouTube removes its video upload size restriction or increases its encoding bitrate. It is unlikely the upload size restriction will be removed by much, but it is likely that the encoding bitrate will increase as consumers gain access to HD cameras.

Nevertheless, unless professional content ad rates end up 9x greater than user generated ad rates, YouTube will continue to have the better business model.

Friday, August 22, 2008

I’m Brian Jordan Bronson, of the Darien Connecticut Bronsons

Stuff like this is always better when it's true. It's also a great follow up to my previous post.

---------------------

From: Brian Jordon Bronson
Date: Sat, Aug 16, 2008 at 8:05 AM
Subject: Hello, Stanford!

Dear Future Classmates,

I can’t believe we’re all going to Stanford!

Please don’t be alarmed by the mass email, I do it a lot (LOLz!). This is just to introduce myself, since being Round 3 I missed most of you at the welcoming receptions. I’m Brian Jordan Bronson, of the Darien Connecticut Bronsons.

As all of you probably found it very difficult as well, choosing between Stanford, Harvard, Columbia, Wharton, Tuck and Kellogg gave me a lot to think about. Luckily we all made the right choice! The past chunk of years, I worked in private equity, specifically LBO (leveraged buyouts). It all became kind of boring, and I started managing my family’s various funds and investments in my free time... when that all became second nature I decided there must be something else out there and chose to get an MBA. I really want to be challenged.

Stanford advised me to sign up for the facebook group, but I’ll let you all know now that I am new to this facebook thing so please don’t judge my lack of friends... I promise I have many friends from school and from my summer homes. What does poking do? Anyway, please do friend me as I don’t want to miss out on any cocktail or dinner parties.

And, I will admit that I recently broke up with my longtime girlfriend.
Yes, I am single, ladies.

Also, does anybody here do community service? Since I’ll be new to the Bay Area, I wanted to find out where I should best go to do my part in helping those not nearly as fortunate as I am. Specifically, I am interested in volunteering at a soup kitchen, or reading to sick children at a hospital, or maybe cleaning up trash in the dirtiest neighborhood. Stuff like that.

If anyone else summers in East Hampton, please let me know... I’ll be here until Labor Day, call me so we can meet up for a Mojito. There are five or six spare rooms in my house for guests, too, if anyone wants to make the trip out here.

See you all in a few weeks!

Godspeed,

BJ (“The Beejster”)

PS—I didn’t get into Schwab, but all that means is we’ll be partying at my off campus apartment 24-7... I’m calling it “The Fortress of Soulitude.”

--

Brian Jordan Bronson, II
Darien, CT