The Week in Geek™ – Dec. 31, 2010

Mark Zuckerberg – Time’s 2010 Person of the Year
Facebook’s boy-wonder joins Jeff Bezos and Bill Gates as geeks who’ve been given honors as the world’s most influential person (the computer received the renamed ‘Machine of the Year’ honor in 1982). With roughly one in twelve world citizens a Facebook account holder, Time refers to Facebook as having a ‘species-wide scale’ that is changing the way humans communicate. The solidly profitable firm should have revenues of $2 billion in 2010 with huge runway for growth.

Among the curious tidbits. Facebook is now responsible for 1 in 4 American page views. Roughly half of all Americans have a Facebook account and worldwide membership is growing at 700,000 a day. Zuckerberg is a billionaire nearly 7 times over. Not bad for a nerdy kid who had a Star Wars-themed bar mitzvah. Zuck’s old CS prof at Harvard says Mark didn’t do very well in his course.  Zuckerberg didn’t take it too hard – he hired his old prof anyway. The Facebook founder also gets props for pledging, Gates-style, to give away at least half his wealth during the course of his lifetime. Time’s reporter confirms the personality of the ‘real’ Zuckerberg bears almost no resemblance to the character portrayed in “The Social Network” (another slam against the Sorkin/Mezrich fiction-fest – there was no “BU” girlfriend – Zuck had been dating his current girlfriend and fellow Crimson student, Priscilla Chen, a year before Facebook even launched). While Zuckerberg initially didn’t want to see the movie, Facebook eventually rented out a bunch of theaters so the whole firm could see it. Facebook’s color scheme of blue & white was chosen in part because Mark is blue-green colored blind.

Facebook has spawned a multi-billion dollar eco-system which includes Farmville/Cityville/Mafia Wars firm Zynga valued at $5.4 billion – a value (albeit an estimate for a firm that’s still private) that is greater than the market value of Electronic Arts. Facebook’s ID is now the web’s ID – consider Facebook login credentials are now accepted by everyone from the NY Times to former rival MySpace to Google’s YouTube.

Perks at Facebook are Google-esque, with three free meals a day, free dry cleaning, and unlimited snacks. 60 Minutes (video) reports that roughly 10% of current staff (from the COO to head chef) are former Googlers. Despite success, Zuck is contrite about his missteps saying “Almost any mistake you can make in running a company, I’ve probably made” (we cover many of them in our Facebook chapter – the firm is a great case for business & technology students).

Time also makes the case that Facebook’s ad-driven future is solid.  While Google’s juggernaut is built on fantastic, but educated guesses of ‘who you are and what you’re interested in’, Facebook doesn’t guess – it knows because, well, you told it! If Nike wants to show a specific ad only to soccer fans in a region, within a specific age range, gender, and who like a particular kind of music – Facebook’s got a rifle scope to pick them off with near-perfect precision.  And let’s be clear what this means.  Facebook does NOT sell your individual data to advertisers. It is the pass-through for ad targeting. That’s a big distinction often lost in coverage. Facebook may know more detail on citizens’ lives than their governments. Perhaps that’s why, as Time reports, China has blocked Facebook since ’09.  Zuck spent part of this past holiday in China, no doubt with an eye on reaching the world’s single largest population of Internet users. Social implications are also explored by Time – from the correlation of a steady rise in yearly scores among US citizens on narcissism scales, to the 81% of matrimonial lawyers citing Facebook the primary source for online divorce evidence. But with Yelp & blog comments already filtering up to show what your “friends” think, Time imagines we might soon see social influence on everything from sharing what’s bought on Amazon to what folks are watching on TV (Facebook television can’t be too far off). Says Zuck “It’s about the idea that most applications are going to become social, and most industries are going to be rethought in a way where social design and doing things with your friends is at the core of how these things work”.

Facebook’s Sheryl Sandberg “Why We Have So Few Women Leaders”
The recent TED talk by Facebook COO Sheryl Sandberg is a must-watch.  Diversity is a vital economic issue in that we’re achieving far below our potential as long as our leadership ranks fail to reflect the percentages of the populations’ intellectual capital.  Powerful, honest, and eye-opening, Sandberg’s talk offers advice and perspective that should be widely shared.

How Zynga Polished CityVille
With nearly 17 million active users, CityVille is now bigger than Farmville.  BusinessWeek offered an inside look at pre-launch prep.  CityVille looks an awful lot like EA’s SIM City, meaning “a game like this 5 years ago was $29 at BestBuy.  Now you get it for free & can play with other people“.  As I return to sabbatical I’m planning on taking our students to Zynga East in Cambridge and to Zynga HQ in San Francisco next semester.  For those who can’t attend, you might want to check out the “Inside Zynga” video from Nightline.

Share Rules Could Push Offering by Facebook
Here’s some info for folks playing the ‘when will Facebook go public?’ guessing game.  An SEC rule states that once a company has 500 shareholders, it must engage in further compliance and publicly disclose its financial results.  The New York Times claims this was the primary driver for many successful tech firms – including Google and Microsoft – to advance their IPOs.  Some speculate Facebook can’t hold out for more than a year without announcing its intention to go public.  How much will it be worth? There is a secondary market in privately held shares.  As mentioned in an earlier WiG, one such market has valued the firm’s shares to suggest a $50 billion valuation.

Amazon’s Holiday Season Soars 44% at Peak
The WSJ does a great job summing up the fun & goose bump-inducing stats from Amazon’s post-holiday press release. Cyber Monday, customers ordered over 13.7 million items worldwide at a record-breaking 158 items per second.  This year’s shopping pace was up 44% over last year’s record-breaking pace. Amazon.com’s third-generation Kindle became the Internet retailer’s bestselling product in history, eclipsing prior title holder “Harry Potter and the Deathly Hallows”. On Christmas Day, more people turned on new Kindles for the first time, downloaded more Kindle Buy Once, Read Everywhere apps, and purchased more Kindle books than on any other day in history. On the peak day this season, Amazon’s worldwide fulfillment network shipped over 9 million units across all product categories.  Holiday products were shipped to 178 countries.  The most remote shipment?  One containing the “Tinker Bell and the Great Fairy Rescue” and “Toy Story” DVDs, “Chicken Soup for the Dog Lover’s Soul,” NHL 11, Halo Reach and Call of Duty: Black Ops, which was delivered to the hamlet of Grise Fiord, north of the Arctic Circle in Canada.  There were millions of Price Checks (the Amazon iPhone app) from Black Friday through the FREE Super-Saver Shipping cut-off date (for delivery before Christmas). The last One-Day Prime order was a Nautica watch that was delivered in time for Christmas, was placed on Dec. 23 at 6:48 p.m. PST and shipped to Billerica, MA, for delivery on Dec. 24. Want better than that? The last Local Express order that was delivered in time for Christmas was placed by a Prime member and went to Woodinville, Wash. It was an Apple Mac Mini that was ordered at 1:41 p.m. on Christmas Eve and delivered at 8:04 p.m. that evening – speedy! Amazon customers purchased enough snow/tire chains to outfit the entire population of three of America’s top ski cities: Aspen, Breckenridge and Sun Valley. For the holiday time period alone, Amazon customers bought enough copies of “Eclipse” for Edward Cullen to watch the movie 1,000 times a day for all 109 years of his life. Amazon customers purchased more Philips Norelco shavers this holiday season than the average number of beard hairs on a man’s face. And if you folded and stacked all the jeans the firm sold you’d have a pile taller than Mt. Everest.

Adam Goldstein & Steve Huffman Demo Hipmunk.com at 2010 Travel Innovation Summit
We’ve been suffering under the burden of  crummy flight search UI for years . The folks at Hipmonk have been paying attention and they’ve introduced a killer, intuitive, and colossally different UI.  This is a must-see for anyone who cares about design, and a great example that we have only just scratched the surface in delivering on the promise of search.

Financial Times names Steve Jobs Person of the Year
Zuckerberg doesn’t get all the glory this year.  Steve Jobs was named by London’s Financial Times as that paper’s Person of the Year. The paper calls Jobs return to Apple (and the fight through health problems) “the most remarkable comeback in modern business history”. Apple’s iPad has been declared the fastest-selling gadget of all time (and it gets my endorsement by utterly changed how I consume media and gather notes – a must-have for this aging guy with bad eyesight and RSI wrists).  A space to watch in 2010 – Apple TV, which has sold over 1 million units this holiday. Jobs has said an App Store for Apple TV is possible.  If a robust set top SDK hits, look for huge set top innovation – games, viewing, interactive TV, and more.  Bring it!

WSJ: IS Top Biz Major in Job Satisfaction Survey
According to an article in the Wall Street Journal only one Management Discipline has a greater than 50% job satisfaction rating. IS of course (although they’re still using the old school moniker MIS to classify our programs).

Who Is Best Positioned To Win The $20 Billion Brand Advertising Prize?
TechCrunch “Tear Downs” provide great, in-depth analysis, and the tear down of brand advertising comparing the new “Big Four” of Facebook, Foursquare, Groupon, and Twitter, is a must-read for anyone interested in online marketing.

TC estimates that online brand advertising has the potential to be a $30 billion worldwide, $20 billion US opportunity.  This is based on the fact that currently marketers spend only 2.6% of budgets online (currently $1.8 billion) even though consumers spend 30% of their time on the Internet.  The comparison is tricky.  Some may argue that the bulk of non-Net ad spend is overpriced & less effective, so Net advertising shouldn’t necessarily be the same percentage-and-dollar ratio. But others point to the persuasive strength of social sites as luring more dollars based on the potential for increased performance. Of top marketers, only Bank of America, Disney, GM, and News Corp spend more than $100 million on the web.

Groupon is controversial (do these efforts train customers to expect deep discounts that push firms into the red, or do they attract new customers and generate much-needed cash flow?) but if the world’s most profitable ad-seller, online-or-off (Google) was willing to cough up $6 billion to buy the ‘social buying’ site, then some really smart folks must see promise in the effort.  An FYI: Groupon’s biggest deal to date was the sale of nearly a half million half-off coupons for Gap.

The TC piece also shows differences between Facebook & Twitter.  Brand advertisers hold 8 of the top 50 most popular pages on Facebook, but none of the top 50 ‘follower’ slots on Twitter. Facebook’s most popular pages are recognizable brands – food and beverage or consumer products – suggesting Facebook is a far more popular and durable way to connect with consumers than conventional websites.

TC suggests the biggest driver of Twitter success is timeliness of the information, but the reasons for this aren’t clear to me.  Users check FB and Twitter quite frequently and ‘opt into’ stream-driven messages from brands. Facebook is also positioned to make a run at both location-based and social/deal buying, meaning it’ll almost certainly compete with Groupon and Foursquare for ad dollars and for consumers as a ‘first choice’ place to look for deals.

When Groupon Dodged Google
Big GOOG allegedly offered to buy Groupon for $6 billion, but got turned down.  Put that in context – it would have been Google’s biggest acquisition by far (the previous leader was the DoubleClick purchase at $3.2 billion). Groupon, the two year old Chicago startup looks like it’s nailed a hyper-profitable, high-growth method of local advertising. Groupon now sends out a daily e-mail to over 35 million subscribers in 300+ cities worldwide. If the deal has enough takers, it becomes ‘live’, with Groupon splitting revenues 50-50 with the local business. The staff of roughly 3,000 includes rows of “phone jockeys” housed in a former Chicago warehouse dialing to convince local businesses to offer steep discounts. Groupon copywriters, many who have backgrounds in stand-up comedy, help craft the pitches.

That’s actually a huge staff scale out in a short time.  In fact, Forbes claims Groupon is the fastest growing business in history (estimated 2010 revenues – $1 billion!).  Groupon operates in a crowded market.  Facebook is gearing up for local buying deals, firms like Boston-based Eversave have a strong following, and Amazon has ponied up a $175 million investment in Groupon rival LivingSocial.  But Groupon does have scale and brand benefits, assets that our Strategy and Technology studies learn can be both formidable and enduring.  Now that Groupon has decided to go it alone, the firm has filed to raise up to $950 million, which be “the biggest round of equity financing by any company since Pixar in 1995”. Says Groupon’s Mason, “We think the Internet has the potential to change the way people discover and buy from local businesses”.  Groupon can thank the Russian sugar daddies DST for making it possible to reject Google. Digital Sky Technologies, which also invests in Facebook and Zynga, sunk $135 million into Mason’s firm back in April.  DST has regularly bought equity from execs and VCs, relieving pressure to sell.

For Bravo One Screen Isn’t Enough
Nielsen says consumers now spend on average 3 hrs & 41 minutes each month simultaneously watching TV and browsing the Net, and roughly 3 in 5 TV viewers engage in two-screen consumption. Bravo is all-in on experimenting how to leverage multiple screens for engagement.  The network’s “Talk Bubble” creates a sort of online viewing party that brings together fellow fans. The site offers tools to allow viewers to share jokes on Twitter, update their Facebook status, and follow a “Tweet Heat” graphic that charted viewers’ collective sentiment on characters such as the Real Housewives. Bravo claims talk bubble can bring in more than a quarter of a million real-time viewers, potentially significant as firms try to battle DVR-based ad-skipping.

Wi-Fi Overload at High-Tech Meetings
Faculty using our Telecom Chapter may find examples in this NY Times article illustrative of the challenges of WiFi congestion.  WiFi hotspots offer finite throughput – meaning if lots of people show up, then you’ve got a traffic jam that’ll grind Internet use to a halt.  Last month’s Web 2.0 Summit saw repeated WiFi failure, and earlier this year Steve Jobs “had to ask the audience at his company’s developer conference to turn off their laptops and phones after his introduction of the iPhone 4 was derailed because of an overloaded Wi-Fi network”.  Audience and venue matters. SocialText’s Ross Mayfield states “I’ve been to health care conferences where no one brings a laptop”, but performance at Tech conferences can be the worst, especially in big events like Apple’s, where guests blog, e-mail, and post photos and video from the venue.  One tech conference reported WiFi failure when multitasking attendees used their laptops to stream live video from another conference – Apple’s product launch – during their own talks. Providers need to consider the size and shape of the room, along with how Wi-Fi signals reflect from walls and are absorbed by the audience.

WakeMate Ships Product
Congratulations to WakeMate, winner of the 2009 Boston College Venture Competition and member of Y-Combinator class of 2009 (firm was then known as WakeSmart).  Their wristband and phone-based system will monitor your sleep patterns and suggest a time period within a 20 minute window which will wake you up less groggy than a standard, jolting alarm.  The system is based on established sleep science.  Kudos to the team for going from idea to shipping physical product and multi-app support (iPhone, Android, Blackberry) in such a short time.  Greg Nemeth, who is on leave of absence from BC to bring his idea to reality, spoke in Prof. Gips’ Honors IS class this Fall.  Best of luck!

The Economics of Holiday Giving
WePay – the Silicon Valley group payments rocket started by BC alums (Rich Aberman, and Bill Clerico) launched their first infographic, reprinted in Mashable at the link above.  The Boston Globe recently profiled the firm in the article “Born in Boston, Grown in California” (TechTrekker Clerico co-founded BCVC and WePay was also part of Y-Combinator’s 2009 class).  The firm is now on its third HQ in less than a year, and is looking for campus reps outside of BC.  Faculty and students at other universities, refer anyone interested in being a WePay campus rep to my former student Tyler Gaffney via [email protected]. They’ll certainly provide a great opportunity and a window on the world of high-growth startups.  Good luck, guys!

AND A HUGE THANKS! As 2010 closes, the textbook I’ve authored, “Information Systems: A Manager’s Guide to Harnessing Technology“, is now in use at half of the Top Information Systems programs classified by US News and World Report.  The book never would have gotten such tremendous adoption if it weren’t for your collective advocacy.  Thanks so much to all for your continued support and for sharing links with faculty and students. Do please continue to share.  I’m grateful for your kindess and efforts!