Careless Whisper

Yes the title is a Wham! song

When the Nintendo came out in 1985, there was something of a misconception of what, exactly, it was. For a generation that grew up without computers, much less video games, the NES must have seemed just like the latest toy – a high-tech plaything that, like other toys or the likes of arcade and pinball games, kids would engage with for a short time and then put away.

It wasn’t, of course; the Nintendo was among the first of the new generation of consoles, and games like Dragon Warrior, Super Mario Bros 3, and of course Final Fantasy ended up devouring not just hours, but dozens of hours, entire afternoons and weekends.

Naturally, there was a backlash among the parents. Did anyone else’s parents threaten to unplug their Nintendo or show it the window? And who can blame them? I can just barely imagine now their confusion (more so in another way, which I will get to) over how exactly this new toy was able to command so much of their kids’ valuable time. At the time, that confusion manifested in frustration and rejection, disgust even.

Thirty years later, video games are a mainstream hobby, largely because the kids who played all those games are now the grown-ups. We didn’t grow up with warped minds (though my mother still nurtures a fear, close to a hope, that she was right about video games crippling my ability to be function), and in fact many of us have found that games have become part of our identity, both individually and as a generation. Some of my most cherished memories from that time are of playing games with my friends (comparing progress in Final Fantasy) and my brother (yelling “word” when he beat Shadowgate, and I don’t blame him).

It’s funny to me, then, when I see people my age and thereabouts clucking with disapproval at people who are somehow managing to, in their eyes (and my own, occasionally, I’ll admit), misuse or abuse the tools of social media.

Someone like the now-infamous Carly McKinney (AKA @carlycrunkbear), whose saucy pictures and, let’s be honest, questionable behavior led to her being dismissed from her teaching position.

While I think we can all get behind the idea that we’d like our schoolteachers to be sober while at work, the question of whether she was using the social web wrong is a more difficult one. On one hand, the way she used it exposed her to widespread scrutiny and ridicule, both of her lifestyle and method of broadcasting it.

But isn’t it a rather more future-proof position to say that she was ahead of the curve? This girl is so wrapped up in social media that the question of keeping these things private may never have occurred to her, account setting or not. Isn’t it reasonable to think that if she’s going to share it at all, it’s likely to get out anyway? If it can happen to Zuckerbergs, it can happen to anyone. And she’s 23 — think of kids in elementary school right now, whose digital lives have been kickstarted by blogging parents and who think of the Internet more like how they think of electricity or running water.

Are we become our parents, yelling at a kid for playing Metroid all night because we have no idea what Metroid is? When we think of the social web as a new tool, the latest in the line of tools beginning with, say, BBSes or IRC, aren’t we coming at this thing from a completely different, and perhaps erroneous, angle?

It’s the flip side of the happy coincidence that I described as defining people my age in Generation i. The way we perceive technology may be unique, but it’s not superior. How we relate to something we saw develop parallel to ourselves is different from how we relate to something that was already mature when we were born. Our grandparents think differently about cars than we do, since when many of them were young, the things were comparably scarce, a luxury item. So I think it’s reasonable to posit that the way we think of social media and the Internet is very, very different from the way kids born in the last 10 years do (to say nothing, I hardly need to add, of our grandparents).

Now, certainly, contemporary (as well as recently revised) notions of privacy and publicity are, like so many Nintendos, being thrown right out the window. But just because the rules are being rewritten doesn’t mean there are no rules. Abusing the social web because it’s always changing is like looting during a revolution.

So at the risk of burning my straw man (or woman, as it happens), it actually seems safe to say that Carly’s actions were, in fact, dumb by any generation’s standards. And not thinking about privacy the same way as others is not the same thing as being oblivious of the fact that things you post on the Internet are pretty much unable to be retracted.

But that said, when looking forward a few years it’s hard not to think that we’ll all eventually be in a similar position, if not quite so dire (or ridiculous): Our lives will be indexed and searchable by our bosses, healthcare providers, and significant others. When you were a smoker and how much you smoked, where you spend your time on any given day of the week, how your hair used to look, how you feel about the president, what you’re like when you’re drunk — it’s all valuable to somebody, and it will either be inferred from circumstantial data or you’ll end up copping to it directly whether you know it or not.

That is to say, in a few years, perhaps Carly wouldn’t need to do what she did, because it would already be done — for her and everyone else. And while good privacy policies and smart utilization of services, among other things, will prevent a few catastrophes, but let’s not kid ourselves: The level to which we document our lives online is deepening, even among those (like myself) whose caution regarding such things approaches Luddism. It’s mostly good, but as always, ignoring the bad just makes it worse.

As usual, the world in 20 or 30 years is elusive to the point of imperceptibility. I could be the wrong one, but I think it’s more likely to be these people with their objections to the way others are using technology we only pretend to understand. It’s a petty, passing tyranny, a nimbyism, this short period where they can shake their heads at the deeds of these misguided youths, oversharing the way they do — sexting, and yoloing, and swagging, and what-all, how can they not see this is ruining their lives, rotting their brains?

—Just like how we rotted our brains with late night sessions of Contra.

Backed Or Whacked: Revenge Of The Dumb Watch

Backed or Whacked logo

Editor’s note: Ross Rubin is principal analyst at Reticle Research and blogs at Techspressive. Each column will look at crowdfunded products that have either met or missed their funding goals. Follow him on Twitter @rossrubin.

Last year, Kickstarter launched a bumper crop of smart watches that connect via Bluetooth to your smartphone. The field was led by the record-setting Pebble, but also included products such as Cookoo, the MetaWatch Strata, and Martian, all of which have shipped by now. Recently, though, a number of timepieces have surfaced that bring us back to basics when it comes to telling time.

Backed: CST-01. Briefly mentioned in last week’s column amid CES alum Tethercell, the CST-01 is certainly a high-tech timepiece that tackles several challenges with smartwatches — girth, complexity and short battery life. Like the recently shipped Pebble watch and the still-delayed Touch Time by Phosphor, the CST-01 uses e-paper technology to display the time. Unlike those watches, though, that’s about all it does — no Bluetooth, no touchscreen, no launching of poison darts into the neck of the enemy spy.

The result is what project originator Central Standard Time claims is the world’s thinnest watch at 0.8 mm, one that dispenses with traditional straps and clasps with its bangle design. Unfortunately, the slim profile makes for some compromises. The watch requires a base station in order to be charged, which needs to take place about once per month, and the power cell is slated to burn out in about 15 years. Forget about passing this on to the next generation that futurists say will be able to tell time simply by looking at their phones.

Thin is in and the CST-01 has already more than quadrupled its goal with about 10 days left to go in the campaign. Watches are still available to backers in black or what passes for white in the e-paper world for $129 and are slated to ship in September.

Backed: The Big Face Woody. This creation of Hawaii-based NFNT (pronounced like the synonym for “eternity,” not “baby”) can claim the cheekiest name for a Kickstarter design product since the MorningHead hair-moistening aid of a year ago. The Big Face Woody (endorsed neither by Mr. Allen, Mr. Harrelson or Mr. Woodpecker) is a watch made wholly of bamboo, save for the steel clasp.

Bamboo is one of the most favored crowdfunding materials up there with silicone and aluminum. The wood, so notes the Kickstarter campaign page, is strong and lightweight. The Big Face Woody weighs in at only 50 grams, (although that’s still four times the weight of the wispy CST-01’s 12 grams) and eco-friendly. The social consciousness of the design team is also reflected in a couple of paragraphs talking about student financial hardships, although there is no direct connection made between raising the funds and helping those students — even by employing them to help make the watches.

Like the CST-01, the Big Face Woody is water-resistant but not waterpoof. NFNT has met all its stretch goals, having collected more than six times its original $11,000 funding goal. The watches, in a range of face sizes, can be preordered for $75 with an extra fiver netting you a date function. Early backers can grab their Woodys as early as March; it would surely be inauspicious for a watchmaker to ship late.

Whacked: Heritage Watch. It’s not unusual for mechanical watches to be offered to backers for hundreds of dollars; such is the case for the recently listed Coastliner watch, which can be claimed for £375. Things seemed to be going well for the effort, led by New York-based Field and Crew. The Heritage Watch would be distinguished by a “smart pin” system that would enable quick changes of wrist straps without any tools. Its entry reward tier included the watch and two bands for $199, a steep discount over the estimated $500 retail price. The campaign had raised over $16,000 — well above its $9,000 goal — and was on pace to pick up more before its February 17 ending date.

Alas, this looks like another Kickstarter campaign that has gone askew. The site has suspended the campaign and the project owner has not provided any official updates since the suspension, although backer chatter indicates that he has claimed he has not heard many specifics from Kickstarter on why funding was suspended while vowing to go to other sites to raise money if it is not resumed. The stoppage may have something to do with the similarities that have cropped up between images of the Heritage Watch and images of other watches.

Things don’t look promising, as the website for Field & Crew has gone offline. Perhaps “Chris” has been inspired by the watch-worthy words of REO Speedwagon when they sang, “I believe it’s time for me to fly.” If the project has turned out to be a scam, though, no money will have been lost by backers, as they have not yet been charged.

You Won’t See Facebook’s Graph Search On iPhone Or Android Anytime Soon

Graph Search

Editor’s note: Tareq Ismail is the UX lead at Maluuba, a personal assistant app for Android and Windows Phone that was a Battlefield participant at TechCrunch Disrupt SF 2012. Follow him on Twitter @tareqismail.

The release of Facebook’s Graph Search has raised much discussion among technology pundits and investors. One of the biggest questions surrounding the highly anticipated feature is its availability on mobile.

After all, Facebook CEO Mark Zuckerberg has said on a number of occasions that Facebook is a mobile company. “On mobile we are going to make a lot more money than on desktop,” he said at TechCruch Disrupt SF 2012, adding “a lot more people have phones than computers, and mobile users are more likely to be daily active users.” Facebook understands mobile’s importance, so why wouldn’t it offer Graph Search for Android and iPhone from the start?

It’s simple: Graph Search for mobile would need to incorporate speech, which is a different beast altogether.

Many of the examples given during the Graph Search keynote contained long sentences, which are not easy to type on a mobile device. Think of the example “My college friends who like roller blading that live in Palo Alto.” Search engines like Google get around this on mobile by offering autofill suggestions, but their suggestions come from billions of queries. For Facebook, since their search is based on hundreds of individual values like “fencing” or “college friends” specific to each user and not a group, autofill suggestions will often not be usefulor worse, will require a lot of tapping and swiping to drill down to the full request.

What’s more is that Graph Search queries are designed to be written out naturally in full-form sentences with verbs, pronouns, etc., which is 0something that keyword search engines like Google do not need. If you’re looking for sushi places to eat on Google, it’s a five-character search for the keyword “sushi.” With Graph Search, Facebook wants to show you sushi results refined by a group of your friends, so the same search would require writing out “sushi restaurants my friends have been to” or “sushi restaurants my friends like.” That’s a lot more typing.

It’s clear that on mobile, Graph Search would need to be powered by speech to make it most effective. No one will want to type out such long sentences. Not to mention, with services like Google Now and Siri, people will come to expect control through speech.

Supporting speech is a different problem altogether than what they’ve solved so far and they’ll have to do a lot more work until it’s available on any major mobile platform. Here are four reasons why.

Speech Recognition Doesn’t Come Cheap

If time is money, then speech recognition is very expensive. It’s well-known that it requires a considerable amount of investment to develop and no one knows this better than Apple and Google.

Apple chose to not make their own speech recognition but rather license Nuance’s technology for Siri. Nuance has spent over 20 years perfecting their speech recognition; it’s not an easy task and they’ve had to acquire a number of companies along the way.

Google, on the other hand, chose to develop their own speech recognition and needed to build a clever system to collect data to catch up to Nuance. The system, called Google 411, set up a phone number where people could call in from landlines and feature phones to ask for local results. Once they got the data they needed, they shut down the service and used it to build their recognition system. It’s taken a company like Google, who masters search, over three years to come to where they are now with their speech recognition.

Even if it takes Facebook half as long to come up with a similarly clever solution, they’ll need to start soon for it to be released any time in the next year.

Names Are Facebook’s Strength And Speech Recognition’s Weakness

One of Facebook’s early successes has been names. The company’s algorithms to return the most relevant person when making a search for a friend played a key role in its early success. People are accustomed to saying “add me on Facebook” without the need to specify a username or handle, an advantage that makes their entry into speech that much harder.

Names are speech recognition’s biggest challenge. Speech recognition relies on having a dictionary or list of expected words that are paired to sample voice data given to the system. That’s why most engines do really well when recognizing common English words but have such a hard time with out-of-the-norm names and varying pronunciations. Facebook has hundreds of thousands of names to deal with and it’s a key part of their experience, so they’ll need to master the domain for it to be useful for their users. Now, one could argue that having access to all these names may give Facebook the edge to solving this problem, but they’ll need to work on a solution for some time for it to become anywhere near acceptable.

Supporting Natural Language Isn’t Easy

The final piece of the puzzle may be the most difficult: supporting natural language is really, really hard. Working at natural language processing company Maluuba, I can attest to just how hard a problem this is to solve. Natural language processing is the ability to understand and extract meaning from naturally formed sentences.

This also includes pairing sentences that have the same meaning but are said differently. For example, with Graph search, I can type “friends that like sushi” and it shows a list of my friends who have identified sushi as an interest, but if I type “friends that like eating sushi” it looks for the interest “eating sushi” — which none of my friends have listed — and it returns zero results. In reality, both sentences mean the same thing but are worded differently. Understanding natural language involves understanding the real intent behind a request, not just its literal intent.

On a desktop browser, they may be able to get users to learn how to search in specific sentence templates, especially with the help of autofill suggestions. But for speech it’s nearly impossible. People ask for things differently almost every time; even the same person can ask for the same request in a different fashion when speaking. Ask 10 of your friends how they would search for nearby sushi restaurants. I have no doubt most, if not all, responses will be different from one another.

Now, they could fix the sushi example I gave earlier but that may cause false positives with other aspects of the system. Understanding natural language requires large data sets and complex machine learning to get right, something that Facebook’s Graph Search team may be investigating but will not be able to master any time soon. It’s just not a simple problem to solve. That’s why Apple jumped into a bidding war to buy Siri, which at its core is a natural language processor. To put into perspective how difficult it was, Siri spun out of the DARPA project that took over five years to build with over 300 top researchers from the best universities in the country.

Languages, Languages, Languages

Facebook has over a billion users who collectively speak hundreds of different languages. Facebook has said they’re beginning their launch with English. How long until all billion users’ languages are supported for the desktop? And since speech is significantly harder, how long until those users are supported on mobile? It’s one thing to support hundreds of languages through text and a much harder thing to support it through speech. This will be the problem they face for the next decade.

Facebook acknowledges that their future lies in mobile. Mobile begs for Graph Search to be powered by speech, something that Facebook simply cannot do yet. I have no doubt they will but it most definitely won’t be to any acceptable quality anytime soon. They’ve taken the first step but they have a long journey ahead of them.

We Made Every SugarCRM Employee A Salesperson – Here’s How You Can, Too


Editor’s note: Clint Oram is the CTO and co-founder of SugarCRM. Follow him on Twitter @sugarclint.

I have worked with companies that considered its customers to be obstacles to avoid or ignore: “If only we didn’t have to deal with those pesky complaining customers,” they’d say, “we’d have time to do really great work.” Any company whose employees still cling to the “customer is always wrong” mindset can kiss success goodbye.

Customers will trust each other before they’ll trust a company, relying heavily on user opinions before deciding where to spend their money. And they don’t need to wait for brands to create a place to share these views; they can find plenty of places to talk trash about your company if you’re ignoring them. Social media has empowered customers to the point where they are self-sufficient and demanding of attention and delivery of quality products.

With so many customers becoming advocates (pro or con) for your company, you need to respond by creating advocates at every level of your business, which may require a major shift in culture. The old-school view of customer relations is that only the sales department gets and keeps customers. Now, all employees, from the CEO to sales to accounting to HR, are players in the customer-satisfaction game.

How do you create this “everybody is in sales” culture? By promoting enterprise-wide engagement. In other words, quickly connect your employees with your customers in high-value interactions, and you create more, happy customers.

Engage Your Customers

To make the significant shift to a sales culture, change needs to start at the top. Over the past 10 years, there’s been a movement at enlightened companies to align their operations specifically around customers. For example, many companies ranging from public, like Zynga, to private, like Onswipe, have added the new C-level position of chief revenue officer, which oversees sales, service, and support departments to keep all of these customer-facing functions operating with common goals.

Other positions that are popping up in the C-suite to create a broad-based sales culture include the chief product officer who is charged with developing solutions that customers truly need (not what you in the business think they need). Chief culture officers, whose brief includes making sure everyone is reaching out to customers in a company-approved manner, is another role that businesses are considering.

And of course, the CEO needs to think of herself as part of this process. In the end, the CEO is your chief customer officer.

Engage With Your Employees

As you enlist your employees in a customer-centric approach to their work, you need to engage in these discussions on their terms. This means establishing places where they can share ideas for raising the bar on customer service – for example, private groups online or internal solutions like IBM Connections or Jive.

Along with providing vehicles to encourage employee camaraderie, you need to give them access to the information that will help them become better, smarter customer advocates. In the old days, customer information did not travel far in the organization; it was mainly delivered up the ladder to management for reporting purposes.

But this unidirectional, siloed approach to customer data no longer helps create a customer-focused culture. The CRM revolution means that this information can be accessed across the business, so that sales can come from any department, or with the help of several departments – not just sales.

Engage The Enterprise

Everyone is becoming part of the sales process. Your company is most successful when you create a company culture that understands this. In addition to encouraging employees to share ideas and revamping your executive structure to place the focus on customers, you need to make changes in how various departments talk to each other.

Traditionally, departments’ goals weren’t shared with others. But today, everyone expects to be part of the decision-making process. Company leaders at SugarCRM are encouraged to create visibility into goals and targets for each quarter. Equal visibility is a terrific motivator.

The process of gathering the enterprise together in a united view of customer service requires social collaboration solutions. They provide the access to information that fuels engagement and can help you share each department’s goals in order to align people, processes, and technology to reach the overall business goal. And make sure to reward all employees when that deal is closed – don’t just limit awards to sales teams.

The combined impact of these customer, employee and enterprise engagement steps is that you send a clear message to customers that they won’t hit barriers when they try to get problems solved or inquire about new products. No matter who they contact in the business, or what department that person is in, the customer will quickly be well-informed.

Think Tracking DAUs Is Enough? Then You’re Not Getting Your Whole Mobile Story

mobile DAUs

Editor’s note: Robert Weber is co-founder and senior vice president of new products at W3i. Follow him on Twitter @robertjweber.

In the mobile world, companies often live and die by metrics: “How are your monthly active users doing? What’s going on with your user retention? How many total downloads do you have?”

These kinds of metrics, which can have widely different implications, can make or break developers. Especially with the Silicon Valley mindset, driven by success stories like Instagram and Socialcam, that says “get users today, make money off them tomorrow.” With this mentality, user metrics often play a larger role than financial figures for some companies.

But what do they all mean? In mobile, daily active users (DAUs) is frequently the standard by which game and app developers are judged. However, the industry doesn’t really have a concrete definition of what a DAU is. Some analytics providers, such as Flurry, use a rolling average, where a user is considered active if they’ve opened the app at least once in the past seven days. Another part of the mobile market considers someone an active user if they’ve used the app on a particular day. To truly define success, the industry needs to settle on what an active user actually is.

Understanding Daily Habits

Before we can really understand the best way to measure and report on mobile metrics, it helps to understand the general habits of mobile users. W3i, which works with hundreds of mobile developers, sees a lot of data on how people interact with mobile apps.

The first thing to consider is that mobile developers can expect to lose about two-thirds of their users on day one. Our data shows that on average, most apps have a retention rate of 31 percent after the first day. In any other business, losing such a significant chunk of your audience so early would spell disaster, but that’s not the case on mobile.

After the first day, developers can expect their user retention to even off slightly but still decline steadily. After seven days, the average user retention for an app drops by about half to 14 percent. By the end of the first month, an average of 6 percent of users will still be interacting with the app.

With such fickle mobile users, it comes as no surprise that mobile developers would want to judge an app’s performance by its DAUs. Who knows what your users will like in a day much less a month?

This brings up the issue of determining what kind of user you actually want. Although it may look better on paper, just because someone plays a game in a seven-day period, it doesn’t necessarily make him or her an active user. However, this DAU measurement is widely used and is artificially inflating the user bases of a lot of apps.

A user can only execute an in-app purchase or view advertisements if they open your app, so it makes sense to count active users as those who have started a session that day. In short, we should be classifying DAUs in the most obvious way possible: the number of people who actually used the app on that particular day. This figure most accurately represents the revenue potential of an app and is a better indicator of how it’s performing.

Once developers effectively understand what to look for in an ideal user, they need to understand how to design their app in a way that attracts those users and keeps their attention. Developers should iterate a few times and make sure their retention is stable. Once they are comfortable, they should pursue more aggressive forms of user acquisition. When acquiring users, developers should benchmark their sources and how each performs to determine where most of their revenue is coming from.

This model is especially effective in mobile gaming.

Mobile gaming has always been a world apart from console and PC gaming. While PC gamers may chug away playing World of Warcraft for hours in their living rooms, and console gamers will spend entire days cooped up slaughtering Covenant in Halo 4, mobile gamers have different playing schedules and usage habits. They’re more likely to clock in their playtime on buses, waiting in lines, and upsetting flight attendants before takeoff.

It comes as no surprise then that the shelf life of a mobile game differs significantly from that of a console game. While AAA console games can keep users engaged for months on end, mobile games almost always see a significant drop in users after day one.

There are also some best practices developers can use to make sure the DAUs they’re seeing are being monetized to their fullest potential in their game or app:

  • Give users some in-app currency off the bat to help them learn about the app or game and how it’s played.
  • Don’t give too much currency away during level-ups or random situations, but still give some away so that users feel they’re getting a valuable game experience.
  • Drive users through points in the app where they can use them often. This includes storefronts or speed-up moments in games.
  • Update your app often, even with small changes. An update can get a dormant or non-active user back to the app by checking out the new content.
  • It’s also important that developers understand that not all active users will be equally valuable. Adding an engagement metric counting the number of sessions per user is also a great idea. This way, you can tell the active users from the super users. 

As the mobile market continues to mature, what metrics are and aren’t important will continue to become apparent. In the meantime, developers need to consider which numbers they really want to focus on.

Google’s AdWords Update: Are Desktops The New Fax Machines?

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Editor’s note: Richard Zwicky is CEO of BlueGlass Interactive, a digital marketing agency and software provider. Follow him on Twitter @rzwicky.

Does Wednesday’s AdWords announcement mean Google is already acknowledging the end of the desktop?

When AdWords was developed, people only worried about ads delivered from websites to people sitting at a desk in front of a computer. No one cared about phones, tablets were not on the market, and notebooks weren’t useful Internet devices unless they were connected to a wall, just like a desktop.

Over the last 10 years, the variety of devices and interfaces has increased dramatically, and AdWords has evolved to keep up, adding features, and offering campaign managers more options and ways to manage campaigns.

The problem is, like any IT project gone awry, it’s gotten out of hand. Ask any developer “Is it possible?” and invariably, the answer is “Yes but…” In Google’s case, whatever was requested usually got built. AdWords evolved like a really inspiring dev version of a Frankenstein experiment, built to address all the possibilities asked of it.

But on Wednesday, Google addressed this problem and changed the landscape when it announced it had to move on, even if we weren’t ready; the AdWords platform couldn’t continue to scale to add more device types and options ad infinitum. So, they took an ax to the options, and simplified everything into a campaign management interface called Enhanced Campaigns.

Few companies in the world consider the future the way Google does. If you take a long-term perspective, Google’s Enhanced Campaigns launch may indicate their belief that the decline in desktop search — first seen in October 2012 – is going to become an even stronger trend.

If this is the case, their move to do away with differentiation between mobile and desktop AdWords is quite logical and a well-thought-out, strategic move towards tomorrow, dragging the marketplace towards fulfilling Google’s vision, whether we are ready or not.

The change to AdWords also means Google doesn’t just see mobile as the future. It implies that from their perspective, the convergence has already happened, and we just don’t know it yet. For Google, the future is now. That’s probably the most important strategic takeaway.

If we listen to Google trumpet the changes, we’re to believe the platform is being simplified and enhanced. On the other hand, the doomsayers would have us believe the sky is falling. Regardless of whether you like the update or not, the move to Enhanced Campaigns really is a case of more is less.

Make no mistake, AdWords had to change. Google either had to move ahead of the market, or watch another company appear and force the issue. They chose the more aggressive route.

As Larry Page’s comments in 2012 would indicate, Google’s leadership team is convinced there should — and will — be no difference in the user experience between mobile and desktop platforms in the future.

Page has also gone on the record stating that he wishes more web designers would build for mobile, as that’s the future. I believe Google’s move will force everyone to begin to move in that direction today.

Is Google right? Will desktops become as passé and obsolete as fax machines?

No one knows, but it’s absolutely clear that Google has put a stake in the ground around mobile search. Google’s Q4 earnings call was dominated by questions focused on understanding mobile Cost Per Click (CPC), which has been used as a measuring stick by which the strength of Google’s mobile strategy has been calculated.

Despite all of Google’s revenue successes, these particular numbers weren’t inspiring, and I could hear frustration in the voices of Google’s leadership team when answering the many questions about their mobile CPC numbers. Rather than answer those questions in detail, they preferred to steer commentary towards other technological advances the company has made, such as the self-driving car.

Clearly, Google doesn’t want the focus of discussion about Google to be on mobile CPC; they want us talking about the amazing things they’re doing and where they could lead.

The change in AdWords removes the distracting mobile CPC topic from the table, and makes the old discussion obsolete. The number is no longer there to discuss. But to argue that the move to the new AdWords is simply to get rid of mobile CPC as a measuring stick would be understating both the implications and the rationale.

Google is absolutely correct when it says search behavior across devices is similar. However, conversion rates have proved to be dissimilar. Google is moving toward grouping ad management for desktop and mobile platforms together, thereby forcing advertisers, by default, to pay the same rates for all devices. This goes against the economic reality of today, but perhaps not of tomorrow, where the mobile experience will be the norm.

In a utopian world, this simplicity is awesome. If user behavior — and most importantly, conversion rates — on mobile platforms and desktops were similar, everyone would welcome this. The only problem is, we don’t live in that world. People don’t pay for clicks, they pay for conversions. Smart marketers understand that clicks from different platforms and devices result in differing conversion rates, and return on investment. Lumping all types of clicks together regardless of outcome just dilutes their value.

How will this change affect Google? The new platform should be simpler to maintain, and support; so that should be an obvious benefit. It’s also built with the future in mind, so better scalability would necessarily be factored in. For people observing Google, it might be a little more difficult to judge success, as this change effectively does away with many historically comparable numbers, and none will exist until a full calendar year under the new system has passed.

The new AdWords system starts rolling out immediately, and will be fully migrated by mid-2013, which ideally means by the end of June, or the end of Q2. So assuming that Q3 is the first full quarter where all advertisers are on the new system, Q3 2014 is the first year-over-year period we will be able to measure on an apples-to-apples basis.

At this point, you’re probably wondering how will the changes affect you if you’re an advertiser? Less complicated campaign management should mean fewer campaigns to manage, which is simpler and should theoretically be less work. Beyond that, I can foresee many implications — some broad, and some tactical.

For the less sophisticated advertiser, this update is a simplification, therefore less to worry about. But advertisers who manage highly effective, fine-tuned campaigns to maximize ROI will need to start over from scratch. Unfortunately, this change also means there are fewer insights to draw from in campaign testing that allow you to learn about and understand your client better.

For example, small advertisers who have a low, fixed monthly budget will see that budget used up more quickly than before. With the bids being set uniformly by default — and most people not knowing or understanding how to make adjustments for the mobile channel – advertisers will pay more for fewer clicks from mobile. This issue will be exacerbated because by default, all advertisers will automatically — and often unwittingly — become mobile advertisers, thus increasing competition for mobile’s highly limited ad-display space.

Previously, you could manage ad campaigns for desktop and mobile devices separately. You could also target by operating system and other factors depending on your level of sophistication. This still-live AdWords support page tells you all about the benefits:

People use mobile devices differently than desktop computers, so it probably won’t surprise you that people also interact differently with ads on mobile devices than those on desktop computers. Setting up a separate mobile ad campaign helps ensure that your ads can be as effective as possible.

Going forward, this will not be the case.

If you’re a more sophisticated advertiser running large global campaigns, the changes might be overwhelming. Some advertisers, like Intel, were looking at mobile as being more of a branding channel, and less about conversions. For these, I expect the changes will affect the personae they have developed over time based on iterative campaign data.

For example, Intel has a marketing persona representing the trendy mobile user that it created to represent and speak to millennials. From a strictly traditional PPC perspective, it is challenging to target a campaign at the persona level, unless you can have granular control across content, video, social, and paid channels.

In the area of persona marketing, the keyword triggers are just keywords; it’s the platforms and devices that really help advertisers segment and target most effectively. With the changes to AdWords, one of these channels just became much more difficult to use.

In the case of the millennial generation, mobile is the most common means of connecting to the web. The most effective way for advertisers to generate the budgets to target these audiences is to track their behavior. Advertisers will now need to adjust to the new reality that Enhanced Campaigns presents and find new and novel ways to build these relationships.

If you believe Google is correct, that in the future everyone’s Internet experience should be a mobile experience, then Wednesday’s move is absolutely brilliant. The question is: Is the market ready? Absolutely not, which is why I expect Google to backpedal lightly on some of these changes to make the transition easier.

How Much Equity Do Your Employees Deserve? The Dynamic-Split Model Breaks It Down


Editor’s note: Mike Moyer is the author of Slicing Pie, a book about implementing dynamic equity splits. Follow him on Twitter @GruntFunds.

Few topics cause more rifts in startup teams than equity splits. Today, the vast majority of equity splits are fixed: set amounts of equity are issued to founders during the early days of a startup forcing them to renegotiate when things inevitably change. For instance, two founders split the equity “50/50” and one does all the work. Then what? Unanticipated changes in the contributions of individual members or the addition and subtraction of employees put team members at odds, each one vying for the largest share they can get of the pie.

However, there is another way that is gaining popularity among bootstrapped startups: the dynamic split. Using a dynamic-split model, entrepreneurs are able to determine exactly how much equity each person in the startup deserves with a level of precision not possible in a fixed-split model. In a fixed-split model, equity decisions are based on what founders anticipate each member of the team will contribute. In a dynamic-split model equity decisions are based on what founders actually contribute.

The dynamic model assigns a relative value to the various contributions from each participant. Time, for instance, is one of the main contributions. The value of an individual’s time is calculated relative to the other members of the team. A senior-level Oracle programmer’s time is more valuable relative to a recent college grad, for example. Other contributions include cash, intellectual property, facilities, supplies, equipment and even important relationships with potential customers or investors. A relative value can be set to each contribution (a list of relative value calculations can be found here).

The dynamic model determines the appropriate percentages by dividing the contributions of one individual by the contributions of all the members of the team. This provides an exact calculation of ownership based on a person’s actual influence on the organization.

Unlike a fixed-split, the dynamic model changes over time as additional contributions are made making it easy to add or subtract team members as needed. Because all values are relative, the model ensures fairness for all participants regardless of their contributions. Those who contribute the most will get the highest rewards.

Take, for example, a small tech startup with two founders. Bill is a seasoned salesperson with 20 years’ experience and a well-developed personal network; and Frank is a young, talented developer. Bill and Frank decide that Bill’s “market value” is probably twice what Frank could get. They set Bill’s hourly rate at $200 and Frank’s at $100.

Additionally, Bill invests $5,000 cash into the company to pay miscellaneous expenses. Cash has a higher relative value than time because it’s much harder to save $5,000 than it is to earn $5,000 (not to mention that all startups need cash). They set the relative value of the cash at four times the actual value. This reflects the importance of the cash and the risk that Bill may lose it all.

At the end of the first month in business Bill and Frank have each worked 100 hours. So, Bill has contributed $20,000 in time and $20,000 in cash ($5,000 times four). Frank has contributed $10,000 in time. So, the total “value” of the firm is $50,000. Bill owns 80 percent and Frank owns 20 percent. Note that the dollar value isn’t an actual reflection of the firm’s value; it simply serves as a way to track the relative value of each person’s contribution (we hope it will be worth much more!)

The following month they hire Sally, another developer. They set her hourly rate at $100 because her skills and experience are similar to Frank’s. Sally also contributes some equipment valued at $10,000. They agree that the equipment isn’t the same as cash, but it’s still more valuable than their time. They value the equipment at twice the cash value ($20,000).

Each team member works 100 hours during the next month. Bill adds $20,000 to his existing $40,000, Frank adds $10,000 to his $10,000 and Sally contributes $10,000 in time plus $20,000 in equipment. Now the total “value” of the firm is $110,000. Bill owns 55 percent, Frank owns 18 percent and Sally owns 27 percent. The dynamic model has easily accommodated the new participant and percentages have adjusted fairly. What Bill owns is a perfect reflection of what he contributed; likewise for Frank and Sally. Bill and Frank have a lower ownership, but they are still happy because the value of the firm has increased.

The equity split will continue to adjust during the formation stages of the company. By the time the company is ready for a significant investment their team will be more settled. Investors will enjoy the benefit of a clean cap table that treats everyone fairly. If the company chooses not to seek outside investment the cap table provides a tool for distributing profits or dividends.

The dynamic equity split is most relevant for early-stage companies. The model virtually eliminates equity allocation mistakes that are common with fixed-equity models and allows teams to move forward with perfectly aligned interests. Equity programs that include traditional options and vesting schedules are better suited for larger companies with less volatility.

The perfect cap table is well within the grasp of any entrepreneur. Implementing a dynamic equity model will accommodate the inevitable changes that companies go through, especially in the early days of a startups life. Traditional fixed models run the risk of unfair equity splits that can cause relationship problems between founders that often lead to the startup’s demise.