Domain Hosting: Your-Site.com & Terrible Customer Service

There is no nice way to put this: Your-Site.com sucks.

I host a handful of domains for various websites and email accounts that I maintain. My biggest account is adamnash.com, which I use to host a wide variety of email accounts that I use regularly.

For example, all of my eBay business goes through my email address, eBay-at-adamnash-dot-com.

I have hosted this domain, website & email accounts with the same company, Your-Site.com, since 2000. At the time, they were a very highly regarded Linux hosting shop, with low prices ($60/year), and great technical service for someone who could handle the technical details of FTP & shell access.

As of January 3rd I have read many hosting reviews, InMotion Hosting Reviews and FieldHost reviews changed the way I host my content, I have moved all of my accounts over to GoDaddy.com. Not only are they cheaper (less than $4 per month!), but they also offer great customer service (1 hour email response), more storage, more accounts, and more features.

As a warning to others, I’m putting this blog post up to tell you the simple truth: stay away from Your-Site.com. If you use them for hosting, switch to GoDaddy.com. If you don’t use Your-Site.com today, consider yourself lucky, and stay away.

The story of why is long, and I’m not sure I have the energy to post all of the absolutely infuriating emails from their customer service and sales staff.  But let me give you the basics:

  1. December 29th: All email accounts cease to receive email. I email their customer support asking when the accounts will be back online.
  2. December 30th: Email accounts still don’t work. So much for the 99.9% uptime guarantee. I receive an email saying that they lost power in their ops center, and their backup system failed to re-establish their mail filers. They are working on fixing it as soon as possible. I respond, requesting their estimate of when email will be online. I start to worry about permanently losing important mail, or bounces to key accounts.
  3. December 31st: Email accounts till don’t work. No response to my customer support email. No notice on the website that I can find. Nothing. Nada. Zilch.
  4. January 1st: Happy New Year! Email accounts still don’t work. No response to my customer support email. No notice on the website that I can find. I start thinking about whether I should move the domain to another provider.
  5. January 2nd: Still no email accounts working. I finally receive an email from their customer support, and it’s a duplicate of the mail I received on December 30, but with an addendum that 40,000 email accounts were lost, and they are re-building them from backup. I respond asking for an estimated date for return. Second email response received (at least, it seems, they decided to work that day). It says, (paraphrased) Please do not email us asking about the loss of email (hah!), we are working as fast as we can. Sending email to customer support does not help.

At this point, I’ve had it. I go over to GoDaddy.com which is my domain registrar. For less than $4/month, they give me:

  • 5GB storage
  • 500 free email accounts (10MB storage)
  • 5 premium email accounts (25MB storage)
  • 250GB bandwidth
  • 10 MySQL databases
  • No ads
  • An incredible host of features, including photo hosting, blogging, etc.

Not only that, but when I ask their customer support a question by email (they have 24/7 phone support), they promise an answer in one hour. And it’s true.

Just to finish the story:

  • January 3rd: I’m all set up with GoDaddy.com, email is flowing actually before end of day on January 2nd. I contact Your-Site.com, and ask them to ZIP up my existing mail folders, and to close the account. They respond by requiring me to fill out a form on their site. I fill out the form, and they close the accounts. When I ask for the mail folders, they rudely reply that I should have requested that before they deleted the account, since they are now deleted. When I provide them the email with the original request, instead of apologizing, they repeat that the mailboxes are now deleted, and that in the future I should make the request before cancelling the account.

The best part, of course, is the footer of their customer support emails which says,

Please tell your friends and business associates about us. Should you refer a new customer to us, we’ll credit your account for one free month!

Sincerely,

Mike Merrill
Your-Site Customer Care
413-499-6690

Well, that’s exactly what I am doing here.   Telling my friends and business associates about them. 🙂

I think this story is a good lesson in terrible customer service. I was a long time customer of your-site.com, using them for six years. I knew there were better deals out there, but what I had was working, and I was happy to be their customer.  I could have easily been their customer for six more years.

If they had just shown any sort of remorse – an apology for the trouble – this might have turned into a story about great customer service. People underestimate how valuable a simple apology can be to rectify even a very bad situation. I was expecting a proactive email that said:

“We’re sorry, but the recent storms have brought down our email service. We may be down for days. We apologize for this interruption, and we know how important our services are to you. We are working as fast as we can to bring your accounts online, and we will be providing you with the next 3 months of service free of charge.”

But that’s not what happened, and now I am not only no longer a customer of your-site.com, I’ve also become an advocate against them.

In honor of GoDaddy.com‘s excellent product & service, I’m going to honor them with a badge on my right-hand column for at least the next 4 weeks. If you need a cheap domain, email address, and website, they are awesome. I just gave my wife her own personalized domain & email address for fun, all for less than $40 per year. They even have an account with 100GB of storage for $6.29/month that might be very interesting for sharing full-size photos with my family.

Thanks for reading my rant.

eBay, Garth Brooks, and Making Money on Inefficient International Markets (Part 2)

This is an update on my experiment in the economics of selling a product that is readily available here in the US overseas using the eBay & PayPal platforms.

In Part 1, I cover the basic background of the experiment, and how I landed on my solution of selling overseas. The item in question: the special edition Garth Brooks 5 DVD set, available for $20 exclusively at Wal-Mart in the US.

eBay, Garth Brooks, and Making Money on Inefficient International Markets

As quick summary, I was able to make a net margin of over 14.1% selling these DVDs on the eBay UK website using nothing more than freely available tools from eBay, PayPal, and the United States Postal service.

The first experiment went so well, I decided to order 10 more DVD sets from Walmart.com (so much for Garth Brooks selling out this year). This time, I attempted to sell them on eBay Germany. In the process I learned quite a bit about how to squeeze more margin out of my shipping, using PayPal’s international postage printing for the first time, and the hazzards of selling into a market where you don’t speak the language.

But first, the economics. Here is my scorecard for selling 10 Garth Brooks DVD sets on eBay Germany.

Germany Sales
Quantity 10

Sales Revenue € 459.50
Average Sales Price € 45.95

Shipping Cost $12.75 2.1%

eBay Fees $86.38 14.5%
Listing Fees $0.12 0.0%
Feature Fees $23.30 3.9%
Final Value Fees $62.96 10.6%

PayPal Fees $27.67 4.7%
Transaction Fees € 16.80
Cross Border Fees € 4.60

Pounds -> Dollars $1.3261
Currency Conversion Fee 2.50%

Total $ Revenue $594.11 100.0%
Total $ Costs $456.44 76.8%

Total $ Profit $137.67 23.2%

Total $ Cost/Item $23.88
Total $ Profit/Item $13.77 22.6%

Wow.

Yes, that’s right. Though the economics were different, the overall profit margin for selling the Garth Brooks DVDs, purchased at full retail from Walmart.com, including shipping, was 22.6%. In fact, you could say that the “return on investment” for spending the$23.88 on the DVD was 57.7%.

Wow.

Let’s do a quick breakdown of what was different about the economics of selling into eBay Germany:

  • Lower Volume. Because eBay Germany had a lower sell through of the Garth Brooks DVD, I only sold 7 copies from my first fixed-price listing. As a result, I had to relist the last 3 for a second week. I should note that I listed the item in the core fixed-price format, at 45,95 Euro, with free shipping. The first listing included Featured Plus placement, but both listings included Sub-Title, Gallery, and Scheduled start time.
  • Different eBay Fee Structure. I was surprised to see that the eBay Germany fee structure in DVDs is very different than the US & UK. As you can see, the listing fee was next to nothing ($0.06 each time), but the final value fee was quite a bit larger. The overall take rate for the DVD for eBay in Germany was 14.5%, higher than the 8.8% in the UK.
  • Strong Euro = Strong Profits. At 45,95 Euro, the DVD sold for over $60 once you convert the Euro to dollars. Even with $12.75 USPS Global Priority Mail shipping, that leaves a lot of profit left over for the seller.
  • Optimizing Shipping is Worth It. When I sold to the UK, it cost me $15.75 to ship the package. Why? Because I used the large USPS Global Priority Mail boxes, which made the package 1 pound, 10 oz. By shifting to a smaller box, I was able to get the package down to 1 pound, 8 0z. which was $3 cheaper. That’s over 10% profit margin right there!

Selling into Germany created new challenges. The first issue was how to create an item description in German. I tried two translation services: babelfish.altavista.com and translate.google.com. Neither did a great job, and both created weird, non-German characters in the result.

I cheated a little here – a friend of mine from the eBay Germany office was in town, and I asked him to “fix up” the auto-translation of my item description. In the end, I’m not sure it mattered. What I noticed was that all of my German buyers spoke English… not surprising in retrospect since they listen to Garth Brooks. 🙂 At the time, however, I thought it was something I needed to sell in Germany.

The second challenge was creating the listing. I found using the eBay Sell Your Item form in Germany difficult, largely because it was in German! I consider myself an expert in the form (considering that I managed the product team responsible for it for about six months). Still, I was surprised how long it took me to complete. I don’t know why, but error messages in German were fairly disturbing to me.

The last challenge was answering questions in German from buyers and potential buyers. I think I made this harder than it needed to be. I was so paranoid about not speaking German, for the first few days I actually took every email, translated it on Babelfish, and read it. I then wrote a response, translated it, and sent it back. Finally, in one email, I just sent back the response in English. Ironically, it turned out the buyers didn’t realize I was from the US. Once I wrote to them in English, they did the same, and the problem went away. But it was stressful while it lasted, particularly when one buyer was asking about bank payment, which is popular in Germany. I was really worried I’d end up with negative feedback for a few seconds there.

To close out my lessons here, let me give kudos to two awesome products:

  • PayPal. The ability of PayPal to allow me to seamlessly collect money in another currency, and then either maintain that currency balance or translate it to dollars is just amazing. A miracle of the modern Internet. I don’t know how an individual could previously sell overseas with such ease, but I consider the 7.2% take rate of PayPal cheap for the priviledge.
  • eBay/PayPal International Postage Printing. It took me a while to get over my fear of change here, but now that I’ve done it I will never look back. These packages weighed over one pound, which normally means you have to go to the post office to send them. Not anymore. I was able to print the postage, stick it in the clear USPS envelope, stick that on the package, and leave it on my porch for pickup. It lets you print the postage and the customs form. One small goof – I forgot to sign it one time. But my mailman brought it back the next day, I signed it, and it was off to Germany.

I’m still waiting for feedback from my last few sales, but now I’m glad to say I have some cool German feedback on eBay that I don’t really understand. But it’s positive, and that’s what counts.

For eBay sellers out there, both individuals and professionals, you should really consider opening your listings up to other countries, and potentially even listing them on those country sites. eBay & PayPal give you all the tools necessary, and as the above experiment shows, the difference can be significant.

In fact, the numbers here are so compelling, I would wager that eBay sellers who master the ability to sell internationally will have a fundamental economic advantage over those who don’t. More profit for the same inventory is always a winner in retail.

On the Record: Meg Whitman

Normally, I don’t read the San Francisco Chronicle. I read the New York Times & Wall Street Journal for my national news, and the San Jose Mercury News for local & high tech coverage. I’m not really sure why anyone actually reads the San Francisco Chronicle anymore, but I digress.

However, they have a great interview with Meg Whitman this week, and I think it’s something worth reading. It’s certainly the longest interview with Meg that I’ve seen in print this year, and it covers a lot of the topics that have been noteworthy in 2006.

ON THE RECORD: MEG WHITMAN

eBay, Garth Brooks, and Making Money On Inefficient Global Markets

(Part 1.  When finished, you should read Part 2.)

One of the reasons I love working for eBay is that I am constantly surrounded with interesting empirical evidence of how markets for physical goods behave. Today, I thought I’d share with you a single anecdotal example of how eBay creates opportunity from a very mundane retail product.

Yes, the product is a Garth Brooks DVD.

Well, to be more specific, it is the new, 2006, special-edition 5 DVD Garth Brooks “The Entertainer” set that comes in a collectible tin. It’s $19.96 at Wal-Mart, and there are two angles here. One, they are only going to make one million copies. Two, they are only available at Wal-Mart in the US.

There was a lot of press about this release, largely because I guess the 2005 edition had sold out quickly and led to a lot of pent-up demand for the product. On a lark, I dediced to order 10 copies from Walmart.com. Total cost, with tax & shipping was $238.77, so I was basically out $23.88 per DVD set.

When I placed this order, I had checked the completed auctions on eBay.com for “garth brooks the entertainer”, and I had seen sets going for as much as $39.99. So I figured I’d be able to make a few dollars selling these off.

However, by the time I received the DVDs, the average price on eBay.com had dropped to about $26, and I wasn’t sure I would make any money on these, after fees, with that type of price. After all, Walmart.com still hasn’t sold out, so I guess it is somewhat interesting that anyone was basically paying 30% over retail price for something that wasn’t in limited supply.

On a hunch, however, I decided to check out the completed auctions on some of eBay’s international sites. One of the amazing things about the eBay site is that it is integrated globally. With the same eBay account, I can log into any eBay site around the world and list an item. What I found was very interesting:

Now, these are live links, so what you see is going to be different than what I saw two weeks ago. But what I saw was this:

  • High volume in the US (over 50 listings), average price about $26
  • Medium volume in the UK (20 listings), average price about 35 pounds sterling.
  • Low volume in Germany (8 listings), average price about 50 Euro.
  • No volume in France. No one cares about Garth Brooks in France, I guess. 🙂

Wow. 35 pounds and 50 Euro are the equivalent of about $60 US. That’s a big difference, and a big markup over the cost of buying these at Wal-Mart.

So I did a little experiment. I put up a single, fixed-price listing with Best Offer on eBay UK for 9 of the DVD sets for 29.99 pounds with free shipping, and a put up a single auction in the US, starting at $0.99.

End Result: I sold all 9 of the sets in the UK in five days… I wish I had more. The US listing closed at $22.01, with $8.95 for shipping because the buyer ironically was from Canada.

Let’s look at the economics in more detail.

If I divide the costs across the 9 sets in the UK, my numbers are as follows:

Sales Revenue £29.99
Shipping Cost $15.75

eBay Fees $4.96
– Listing Fee $0.54
– Feature Fees $1.89
– Final Value Fees $2.53

PayPal Fees $2.52
– Transaction Fees £1.07
– Cross Border Fees £0.30

Pounds -> Dollars $1.8830
Currency Conversion Fee 2.50%

Total $ Revenue $55.06
Total $ Costs $47.10

Total $ Profit $7.95

Wow. Thats a 14.1% profit margin on the sale price. All for something anyone could have purchased on Walmart.com.

Just for completeness, here is the economics for the US sale:

Sales Revenue $30.96
Shipping Cost $6.00

eBay Fees $2.26
– Listing Fee $0.20
– Feature Fees $0.90
– Final Value Fees $1.16

PayPal Fees $1.51
– Transaction Fees $1.51
– Cross Border Fees $-

Total $ Revenue $30.96
Total $ Costs $33.65

Total $ Profit $(2.69)

Yes, that’s right. Lost money on the US sale.

The fact that I lost money on the US sale isn’t surprising… eBay is a pretty efficient market, and the idea that you could make money buying a product at retail and selling it on eBay is dubious at best, and given that the retailer is the biggest retailer in the US, it’s nearly impossible.

However, I’m amazed at how much money was available to be made selling globally. And eBay makes this so incredibly easy:

  • Listing. I basically just went to the eBay UK website, clicked Sell, and used exactly the same form that is available in the US to list. Incredibly easy.
  • Pricing. The exact same completed auctions functionality is available for the UK site as the US site. Easy.
  • Shipping. I just priced out the shipping via USPS Global Priority mail on the usps.com website. $15.75. Easy.
  • Payment. PayPal is absolutely amazing. Not only could UK buyers pay me in pounds sterling, but I discovered that PayPal will actually let you maintain an account balance in 19 different currencies! They charge a flat 2.5% to convert the payment to dollars, but you can leave your money in pounds sterling and still earn interest on it! (Not a bad feature financially if you believe in diversifying your currency exposure…)
  • Managing your Listings. The UK listing showed up in My eBay and all of my eBay tools the same way every other listing did. Seamless. Painless. Amazing.

I have a few takeaways from this experiment. No, I am not planning to quit my day job to be an import/export eBay seller. But, I do think this example points to some key truths about global e-commerce today:

  • Global markets for retail product are very inefficient. This Garth Brooks DVD was only released in the US. Why? Wal-Mart has a presence in other countries. Maybe it wasn’t worth the logistics for relatively low demand in other countries. Maybe there was limited supply, and they figured the US market was sufficient. Who knows. The point is, there are clearly buyers in other countries who were being underserved here, and it also looks like not enough sellers were stepping into the void to help them.
  • eBay helps make inefficient markets efficient. Meg & Pierre have been talking about this effect for many years, but this is a direct example of it. eBay significantly lowers the barriers to trade globally, and as a result an individual like myself can quickly step in and create value. That 14.1% profit is value, and it doesn’t even count the additional value that was realized by eBay & PayPal through their fees.
  • PayPal is a game changer for international commerce. I knew this academically before doing this experiment, but now I can really feel it viscerally. Being able to handle foreign currency is not something that most businesses, let alone individuals, can handle. But PayPal makes it seamless. Unbelievable. It’s also worth noting that PayPal made a pretty penny here too. My fees on an average UK sale to eBay were about 8.8% of the sale price. The PayPal fees, including currency conversion, were 7%.

As the internet continues to grow, more and more online retailers are going to wake up to the international opportunity. Leveraging PayPal, any webfront store could likely easily collect sales globally (although not with the demand generation of eBay).

To continue the experiment, I’ve ordered 10 more DVD sets… I’m going to try to sell these in Germany, to see if I can overcome the language barrier. To date, I have sold items on eBay to buyers in over 30 different countries, so I’m optimistic that it will work. I’ll post the results to this experiment as well, if people are interested.

P.S. If you are wondering why I take the time to do things like this in my spare time, the answer is pretty simple. I’m a big believer that in technology you have to use your own product, so that you can better understand the experiences of your users. At eBay, it is even more important than at a typical technology company, because the product isn’t just a list of features – it’s the basis for running a business online.

Also, I tend to shop on eBay quite a bit, so making money through selling on eBay helps “fund my habit”, so to speak.

(Please check out Part 2 of this article.)

Yahoo “Peanut Butter” Memo Calls for Big Headcount Cuts

I normally don’t like to do this, but Paul Kedrosky had excellent coverage today of the Yahoo “Peanut Butter” memo, and it’s worth reproducing here. I have quite a few friends at Yahoo now, I’ll have to reach out to them to find out how this might affect their areas. It’s a bit surprising to me to see Yahoo, who has nominally always been organized by business unit, come out and say that they want to move even further in that direction, with a much stronger “General Manager” role for their properties.

Everything below here is from his post.

This critical, internal Yahoo memo was being forwarded all over the place late yesterday, and made the WSJ this morning. The author is allegedly Brad Garlinghouse, a Yahoo senior V.P.

I’m guessing this was written with full knowledge it would be forwarded outside the company, but it still has some strong statements about Yahoo’s fuzzy strategy, its duplicate properties, and its messy structure. Among other things, it calls for 15-20% cut in headcount, which should get traders busy on Monday.

Three and half years ago, I enthusiastically joined Yahoo! The magnitude of the opportunity was only matched by the magnitude of the assets. And an amazing team has been responsible for rebuilding Yahoo!

It has been a profound experience. I am fortunate to have been a part of dramatic change for the Company. And our successes speak for themselves. More users than ever, more engaging than ever and more profitable than ever!

I proudly bleed purple and, yellow everyday! And like so many people here, I love this company

But all is not well. Last Thursday’s NY Times article was a blessing in the disguise of a painful public flogging. While it lacked accurate details, its conclusions rang true, and thus was a much needed wake up call. But also a call to action. A clear statement with which I, and far too many Yahoo’s, agreed. And thankfully a reminder. A reminder that the measure of any person is not in how many times he or she falls down – but rather the spirit and resolve used to get back up. The same is now true of our Company.

It’s time for us to get back up.

I believe we must embrace our problems and challenges and that we must take decisive action. We have the opportunity – in fact the invitation – to send a strong, clear and powerful message to our shareholders and Wall Street, to our advertisers and our partners, to our employees (both current and future), and to our users. They are all begging for a signal that we recognize and understand our problems, and that we are charting a course for fundamental change, Our current course and speed simply will not get us there. Short-term band-aids will not get us there.

It’s time for us to get back up and seize this invitation.

I imagine there’s much discussion amongst the Company’s senior most leadership around the challenges we face. At the risk of being redundant, I wanted to share my take on our current situation and offer a recommended path forward, an attempt to be part of the solution rather than part of the problem.

Recognizing Our Problems

We lack a focused, cohesive vision for our company. We want to do everything and be everything — to everyone. We’ve known this for years, talk about it incessantly, but do nothing to fundamentally address it. We are scared to be left out. We are reactive instead of charting an unwavering course. We are separated into silos that far too frequently don’t talk to each other. And when we do talk, it isn’t to collaborate on a clearly focused strategy, but rather to argue and fight about ownership, strategies and tactics.

Our inclination and proclivity to repeatedly hire leaders from outside the company results in disparate visions of what winning looks like — rather than a leadership team rallying around a single cohesive strategy.

I’ve heard our strategy described as spreading peanut butter across the myriad opportunities that continue to evolve in the online world. The result: a thin layer of investment spread across everything we do and thus we focus on nothing in particular.

I hate peanut butter. We all should.

We lack clarity of ownership and accountability. The most painful manifestation of this is the massive redundancy that exists throughout the organization. We now operate in an organizational structure — admittedly created with the best of intentions — that has become overly bureaucratic. For far too many employees, there is another person with dramatically similar and overlapping responsibilities. This slows us down and burdens the company with unnecessary costs.

Equally problematic, at what point in the organization does someone really OWN the success of their product or service or feature? Product, marketing, engineering, corporate strategy, financial operations… there are so many people in charge (or believe that they are in charge) that it’s not clear if anyone is in charge. This forces decisions to be pushed up – rather than down. It forces decisions by committee or consensus and discourages the innovators from breaking the mold… thinking outside the box.

There’s a reason why a centerfielder and a left fielder have clear areas of ownership. Pursuing die same ball repeatedly results in either collisions or dropped balls. Knowing that someone else is pursuing the ball and hoping to avoid that collision – we have become timid in our pursuit. Again, the ball drops.

We lack decisiveness. Combine a lack of focus with unclear ownership, and the result is that decisions are either not made or are made when it is already too late. Without a clear and focused vision, and without complete clarity of ownership, we lack a macro perspective to guide our decisions and visibility into who should make those decisions. We are repeatedly stymied by challenging and hairy decisions. We are held hostage by our analysis paralysis.

We end up with competing (or redundant) initiatives and synergistic opportunities living in the different silos of our company.
• YME vs. Musicmatch

• Flickr vs. Photos

• YMG video vs. Search video

• Deli.cio.us vs. myweb

• Messenger and plug-ins vs. Sidebar and widgets

• Social media vs. 360 and Groups

• Front page vs. YMG

• Global strategy from BU’vs. Global strategy from Int’l

We have lost our passion to win. Far too many employees are “phoning” it in, lacking the passion and commitment to be a part of the solution. We sit idly by while — at all levels — employees are enabled to “hang around”. Where is the accountability? Moreover, our compensation systems don’t align to our overall success. Weak performers that have been around for years are rewarded. And many of our top performers aren’t adequately recognized for their efforts.

As a result, the employees that we really need to stay (leaders, risk-takers, innovators, passionate) become discouraged and leave. Unfortunately many who opt to stay are not the ones who will lead us through the dramatic change that is needed.

Solving our Problems

We have awesome assets. Nearly every media and communications company is painfully jealous of our position. We have the largest audience, they are highly engaged and our brand is synonymous with the Internet.

If we get back up, embrace dramatic change, we will win.

I don’t pretend there is only one path forward available to us. However, at a minimum, I want to be pad of the solution and thus have outlined a plan here that I believe can work. It is my strong belief that we need to act very quickly or risk going further down a slippery slope, The plan here is not perfect; it is, however, FAR better than no action at all.

There are three pillars to my plan:

1. Focus the vision.

2. Restore accountability and clarity of ownership.

3. Execute a radical reorganization.

1. Focus the vision

a) We need to boldly and definitively declare what we are and what we are not.

b) We need to exit (sell?) non core businesses and eliminate duplicative projects and businesses.

My belief is that the smoothly spread peanut butter needs to turn into a deliberately sculpted strategy — that is narrowly focused.

We can’t simply ask each BU to figure out what they should stop doing. The result will continue to be a non-cohesive strategy. The direction needs to come decisively from the top. We need to place our bets and not second guess. If we believe Media will maximize our ROI — then let’s not be bashful about reducing our investment in other areas. We need to make the tough decisions, articulate them and stick with them — acknowledging that some people (users / partners / employees) will not like it. Change is hard.

2. Restore accountability and clarity of ownership

a) Existing business owners must be held accountable for where we find ourselves today — heads must roll,

b) We must thoughtfully create senior roles that have holistic accountability for a particular line of business (a variant of a GM structure that will work with Yahoo!’s new focus)

c) We must redesign our performance and incentive systems.

I believe there are too many BU leaders who have gotten away with unacceptable results and worse — unacceptable leadership. Too often they (we!) are the worst offenders of the problems outlined here. We must signal to both the employees and to our shareholders that we will hold these leaders (ourselves) accountable and implement change.

By building around a strong and unequivocal GM structure, we will not only empower those leaders, we will eliminate significant overhead throughout our multi-headed matrix. It must be very clear to everyone in the organization who is empowered to make a decision and ownership must be transparent. With that empowerment comes increased accountability — leaders make decisions, the rest of the company supports those decisions, and the leaders ultimately live/die by the results of those decisions.

My view is that far too often our compensation and rewards are just spreading more peanut butter. We need to be much more aggressive about performance based compensation. This will only help accelerate our ability to weed out our lowest performers and better reward our hungry, motivated and productive employees.

3. Execute a radical reorganization

a) The current business unit structure must go away.

b) We must dramatically decentralize and eliminate as much of the matrix as possible.

c) We must reduce our headcount by 15-20%.

I emphatically believe we simply must eliminate the redundancies we have created and the first step in doing this is by restructuring our organization. We can be more efficient with fewer people and we can get more done, more quickly. We need to return more decision making to a new set of business units and their leadership. But we can’t achieve this with baby step changes, We need to fundamentally rethink how we organize to win.

Independent of specific proposals of what this reorganization should look like, two key principles must be represented:

Blow up the matrix. Empower a new generation and model of General Managers to be true general managers. Product, marketing, user experience & design, engineering, business development & operations all report into a small number of focused General Managers. Leave no doubt as to where accountability lies.

Kill the redundancies. Align a set of new BU’s so that they are not competing against each other. Search focuses on search. Social media aligns with community and communications. No competing owners for Video, Photos, etc. And Front Page becomes Switzerland. This will be a delicate exercise — decentralization can create inefficiencies, but I believe we can find the right balance.

I love Yahoo! I’m proud to admit that I bleed purple and yellow. I’m proud to admit that I shaved a Y in the back of my head.

My motivation for this memo is the adamant belief that, as before, we have a tremendous opportunity ahead. I don’t pretend that I have the only available answers, but we need to get the discussion going; change is needed and it is needed soon. We can be a stronger and faster company – a company with a clearer vision and clearer ownership and clearer accountability.

We may have fallen down, but the race is a marathon and not a sprint. I don’t pretend that this will be easy. It will take courage, conviction, insight and tremendous commitment. I very much look forward to the challenge.

So let’s get back up.

Catch the balls.

And stop eating peanut butter.

Insights on Design: Marissa Mayer & Google Search Results

I picked up this snippet from John Battelle’s Searchblog yesterday:

Marissa Mayer, at Web 2.0 today, shared insights into some lessons Google has learned in trying to serve users. The take-away is that Speed is just about the most important concern of users—more than the ability to get a longer list of results, and more valuable than highly interactive ajax features.

What was most interesting to me, however, was the comments below about how the most effective results from testing were the opposite of what users believed they preferred:

…they didn’t learn that from asking users, just the opposite. The ideal number of results on the first page was an area where self-reported user interests were at odds with their ultimate desires. Though they did want more results, they weren’t willing to pay the price for the trade, the extra time in receiving and reviewing the data. In experiments, each run for about 8 weeks, results pages with 30 (rather than 10) results lowered search traffic (and proportionally ad revenues) by 20 percent.

The reason I wanted to highlight this insight here is that it offers up perhaps one of the greatest challenges across any design practice that tries to focus on the customer experience: what people say they want, and what actually performs best are not necessarily the same. In fact, I would argue that they are different in most cases.

This challenge is not a surprise for professionals in marketing, politics or finance. These fields have long recognized that there is a large difference in what people say they will support vs. what they actually do support. However, it’s a particular challenge in product design because so many people want to “provide the best possible user experience”.

At every company I have worked for, there has always been a large debate about how to do the best product design. Do you reach out, through focus groups and customer visits, and ask your best customers what new improvements they would like to see? Or do you quietly observe, through testing and product metrics, and then use inspired design professionals to produce the great advance in usability?

As a product professional, I truly believe that the answer is to do both. There is no doubt that listening to your customers directly can give you great insight into their experience and their prioritization of problems. This insight is the key to customer empathy, which I believe is the key to customer-centric design in any field.

At the same time, it is extremely important to recognize that the rationalization that many people give when making choices may not be fully informed. They likely do not realize all of the options available to them, or the options that are available technically. They are likely not experts trained in design, finance, marketing, technology, or psychology. Observation, whether direct or indirect, is they key for more informed experts to help produce solutions that the customer may not understand are possible. Customers will ask you for a candle, when what they really want is portable light. They will ask you for a VCR with fast rewind, instead of a DVD player.

So, in this case, to borrow the corporate-speak, you need to embrace the AND. Listen to your customers, empathize with them, know them as they know themselves. But measure and observe, review the data, and leverage the professional expertise of the product team to delight your customer with solutions that they didn’t even realize were possible. Once you have those designs, you have to test and tune them. You’ll know when you are on the right track when you find yourself surprised and delighted by your customer insights and design results.

Riya tries again as Like.com

I read a lot of news today about Riya trying to reinvent itself as Like.com today. Of all the coverage, Don Dodge’s summary resonated with me the most.

Riya tries again as Like.com

I think Don uses Riya to summarize of the key takeaways I had from my own experience in venture capital:

The lesson for entrepreneurs is don’t have preconceived notions about how your product/service will be used. Test with lots of different customers to discover where they see value. Remember, it is not about the technology…it is about the problem it solves.

Personally, while I find Riya’s technology truly exciting in its potential, this new direction feels a bit too manufactured, a bit too orchestrated and timely. It rings of smart people figuring out strategy behind closed doors, rather than a true customer-driven request or need.

Metadata tagging of blogs and pictures is hot right now, but tagging of video is just getting started. Is it that hard to believe that in a few years, when studios build the digital versions of their properties for distribution (either BD/HD DVD and/or download versions) that they will tag them with the appropriate commercial content? Wouldn’t it be easier for software on the web or on your TV box to just then link to appropriate interesting items (like boots, dresses, cars, other product placements) to a rev-share storefront for the studio? And wouldn’t the owners of that content want to control that linkage – charge for it, since it’s their property (the movie, the show, the shot) that’s driving the demand?

This is hot technology and it’s incredibly generalized, but in many cases we tend to look for the ultimate solution when a very simple, manual process can hit the business need 80/20. So I’m still not sure this is a business vs. a cool demo.

BTW If you haven’t tried it out, go see the Like.com Alpha site.

Remember the $1M Homepage? MMMZR takes Ponzi to Web 2.0

Seeing this type of site just makes you so angry that people could make money this way.

MMMZR homepage

The founder blog is here.

I guess I’m just kicking myself for not doing it first. The Ponzi scheme is a historically proven model for allocating money and gaining traction. Like the $1 Million homepage, I guess this business is a 100% based on his ability to generate press and therefore traffic to his single page.

Well, now I’m helping out… sigh.

Are Web 2.0 Social Networking Sites Exponential?

Jason Steinhorn sent me a link to this fairly interesting blog post on the growth dynamics of social networking sites.

The mathematics of Web 2.0: Why don’t ALL social networking sites experience phenomenal growth?

The article looks at two interesting questions:

  1. Do social networking sites show N^2 growth (ala Metcalfe’s Law), or do they show 2^N growth (exponential)
  2. Why do some social networking sites show far more rapid growth than others.

I need to think about this a bit more.  My initial reaction was no, these sites are showing N^2 growth (which is huge), and the author is getting confused about the fact that trees don’t grow to the sky, and not all sites are going to fulfill their algorithmic destiny.

However, on further consideration, the growth of groups is really the key.  Since groups can continue to form, and can “repeat” membership fairly aggressively, you might be seeing more of a combinatorics equation, like the one in his article.   A study of the growth of groups might be the real key here – I’m not sure these sites really support full combinatorics, which is what you’d need to see 2^N behavior.

If you are wondering why this matters, let’s try a mathematical explanation.  These equations define the “growth characteristics” of certain types of models.

N^2 (N Squared) tends to get you numbers like:

1, 4, 9, 16, 25, 36, 49, 64, 81, 100

Pretty good.  1 to 100 in just 10 steps.

2^N (2 to the N) tends to get you numbers like:

2, 4, 8, 16, 32, 64, 128, 256, 512, 1024

1024 in just 10 steps.  Much more powerful growth, and the difference gets more and more staggering as the model grows.

This is why, by the way, compound interest is your friend.  Exponential growth is your savings doubling regularly, over some period of time.

Of course, this article has me thinking… Metcalfe’s Law is about computer networks.  But why wouldn’t computer networks actually show exponential growth?  After all, I can belong to multiple networks – my ISP’s network, my home LAN, my workplace LAN (VPN)… is there some element of this growth in the networking business as well?  Is that why wireless networking has been so powerful?  The overlay of these “networking groups”?

There’s something interesting here… but it’s just too late tonight for me to figure it out…

Mark Cuban loves YouTube

From one of the blogs I read, one of the better dialogs about the Mark Cuban comments on YouTube and its copyright liability.

Don Dodge on The Next Big Thing: Mark Cuban loves YouTube

I find the comments to this post almost more interesting than the blog post itself.

To me, the issue of all the major intellectual property legal concepts: copyright, trademark, and patent face considerable challenges from the rapid advance in technology.  It’s only getting murkier.

This is one of the situations that you wish Congress would get involved in to make things clear without years of legal maneuvers, but of course, the last time they tried that we got the DMCA.

Mark has a strong point here about the significant amount of infringing content that YouTube has on its site.  It probably would not be hard to evaluate, based on community rank and views, which “type” of content is driving most of YouTube’s traffic – clean or dirty.  Since any homemade video with a song snippet or video snippet from professional sources is dirty, I’m guessing that this type of analysis would not bode well for an argument that YouTube is primarily for clean content.

At the same time, YouTube is not Napster, and YouTube is not Betamax.  It’s something new, and as usual, it will likely be 2010 before our legal system sorts it out.  In the meantime, something even more innovative and challenging to traditional definitions of intellectual property will come into existence…

Just wait until we get that Star Trek replicator technology going…

Ning on GigaOM & SearchBlog

It looks like Ning has been picked up on some heavyweight blogs today:

Om Malik on Ning

John Battelle on Ning

I’ll save my comments on Ning for another post, another time. I certainly think that Ning shows just how tenuous, from a technology perspective, the Web 2.0 sites hold on users can be.

In any case, I’m going to take this opportunity to share instead one of life’s little pleasures – seeing a friend’s name in print. I first met Gina Bianchini in high school here in the Bay Area, and got to catch up with her a few years ago when she accompanied another Stanford friend to one of my birthday parties.  Growing up in Silicon Valley is fun that way.
I remember hearing the news when Gina took on the opportunity, and its great to see some positive press around Ning. Like all startups, it certainly seems to have evolved considerably from its early days.

Honestly, seeing Gina’s company called out on these major blogs is just a really nice way to start the day. Congratulations to Gina & the Ning team.

Randy Smythe & Glacier Bay DVD (former eBay Powerseller)

Two eBay-related posts in as many days?  There goes that promise…

However, it is newsworthy to note that Randy Smythe, a former eBay Powerseller who achieved over 200,000 positive feedback, has started a column outlining his views on eBay.

Randy decided to leave the world of online selling in February 2006, and the radio silence since then has created quite a bit of chatter in the eBay community.

The introductory article is here:

What is the E! True Hollywood Story About eBay’s Former Top Seller Glacier Bay DVD? 

Interestingly, Randy is quite reticent about his own successes and failures in business, which to me is refreshing.  Running a small business is one of the most difficult challenges professionally, and running one online is no exception.  If Randy chooses to share his insights from this experience, it could benefit a lot of people.

I’ve commented on this blog that people are rarely rational with money, and surprisingly, this can even impact people when they run multi-million dollar businesses.  Like personal finance, I believe that entrepreneurs have the most to learn from each other – the good, the bad and the ugly.

To give some insight into Randy’s perspective, he linked to this article from The E-Commerce Guide on the challenges facing eBay.  It’s an interesting piece as well.  You can find it here:

eBay: Down But Not Out 

I am, of course, extremely optimistic about the future for eBay and for e-commerce in general.

eBay Express TV Campaign Launches

This is my personal blog, so as a rule, I try to avoid posting too much about anything resembling work. However, it’s no secret that I currently work as a Director of Product Management at eBay.

One of the most significant achievements of my career has been the work over the past 18 months bringing to life a whole new e-commerce site and business for eBay – eBay Express. eBay Express is a new site from eBay which allows buyers to quickly and easily shop the incredibly large selection of brand new, fixed-price items for sale on eBay, exclusively from experienced merchants.

eBay Express

I may post at a later time about some of the great things that I learned from the process of launching site of the technical and business scale of eBay Express, but for now I just want to highlight a milestone for the site – our first TV advertising campaign.

eBay is releasing 22 commercials – all based on the same theme, but all unique. They are all available for viewing on a special website:

http://www.whatisit.com/

You will definitely see the spots on network television in the upcoming weeks. Look for it on popular season premieres and sports broadcasts.

It’s a funny feeling to see something that began as just a few people in a room with a whiteboard and laptops turn into something on national television. Amazing, really. I feel truly privileged to be a part of it, and to help bring this new site to the eBay Community and to the world of e-commerce.

So, check it out, and tell a friend. Buy something on eBay Express. Let me know what you think.

Google, Apple & EBM (Everyone But Microsoft)

A lot of press today about Eric Schmidt, CEO of Google and alumnus of Sun & Novell, joining the Board of Directors of Apple Computer.

http://www.appleinsider.com/article.php?id=2003

Everyone is a buzz with implications of what happens if these hot hot hot companies join forces against Microsoft. As you can tell from my sarcasm, as usual, I think the press is sensationalizing a fairly mundane corporate event here, just because putting Google & Apple in the title of articles gets readers these days.

Don Dodge potentially gives this idea more credit than it deserves, but provides a really thorough explanation on why we shouldn’t count our merger chickens before they have hatched.

Of course, if you look closely at any two big internet players these days, you can find synergies:

  • Apple.com has a lot of traffic
  • The Safari browser has 3% marketshare and growing
  • iTunes is the winner in the online distribution of music
  • Google is the winner in market share for natural search
  • Google paid search economics are currently the best available
  • Google Video is a player in the nascent digital video market

However, this announcement has a lot more to do with the fact that Steve & Eric run in the same circles, have a lot of common friends and beliefs, and of course, Google & Apple are both great consumer internet brands. It looks good for Eric & Google to be on the board of Apple, and it looks good for Apple to have Google & Eric on board. Simple.

What is interesting to me, however, is how much better Google is doing handling the mantle of “Leader of the EBM Club” (EBM = Everyone But Microsoft). This has been a dangerous baton to hold, and many formerly strong companies have been destroyed this way. But Google has learned a thing or two about how to proceed here, and it is interesting to watch the next round of the “let’s try to topple Microsoft” game.

It’s different this time, of course. Google & Yahoo both are giving Microsoft fits, so the three-way dynamic is immediately more interesting. Success by new entrants (MySpace, Facebook, YouTube) keep changing the game. The resurrection of Apple continues to astound veterans. And as eBay has shown recently, the other internet powers will weigh in and influence this game. This is a very exciting time to be in the Internet space.

I remember in the late 1990s when Netscape had this mantle, and completely failed to appreciate the responsibility. They largely shunned Apple. Their arrogance got in the way of a deal with AOL (ironic, given the later merger).

There was a time when Netscape had all the market share you could want, but Microsoft clawed their way into a significant minority (25-30%). Then with one deal (the infamous AOL deal to use Internet Explorer), they flipped to majority marketshare and never looked back.

I bring up this story because shunning Apple was not about marketshare, although at the time Macs were still disproportionately strong in Internet market share because they come with networking out of the box, and because Macs were strong in the university & high income demographics (early adopters of the web).

Apple is the Grandpa of Microsoft battles of yesteryear. It is still a thought leader on imagining a world where you DON’T need a DOS/Windows PC. Their audience, though small, are thought leaders – disproportionately represented by the creatives, the journalists, and the executive ranks. They are also cooler than most.

By linking their name with Apple, Google in some ways gains a small, but powerful ally. Like a chapter out of The Lord of the Rings, it makes people think maybe this new champion will succeed against Microsoft where others have failed. The prophecy fulfilled.

The baton is passed.

I’ll post another time about why I think the question of Google vs. Microsoft is likely the wrong one. The Google ethos isn’t about killing Microsoft. In the end, this is much more about future growth opportunities for Microsoft than any type of defeat. But in our market-based economy, growth is power, so it’s worth talking about… another day.