How Pinterest Became What Flickr Failed To

Like a lot of people I have been fascinated by the explosive growth that Pinterest has experienced. At first curiosity, Pinterest is now a full blown phenomena that has jumped from women planning their weddings, or wishing they were planning a wedding, and foodies to mainstream consciousness.

Businesses are openly embracing Pinterest and media organizations are figuring out how to use it, much like they did with Tumblr last year. Get Satisfaction is now on Pinterest with a grassroots effort that caught fire a few weeks ago and I am continually amazed by the innovative uses for presenting visual material in the context of a business objective.

I love the fact that Pinterest exploded in popularity outside of the echo chamber that is Silicon Valley. Prominent SV angel investors passed on the deal, few people wrote about it, and it took 2 years from it’s founding (2008) to get a Crunchbase entry, much less any significant press coverage. This is the classic Silicon Valley bootstrap-to-riches story (well OMGPOP clearly has that title this week) and Silicon Valley was largely lacking in invites to the service while middle mainstream America fueled it’s early growth.

Perhaps the most bone jarring thing to consider is how Yahoo let Flickr die on the vine while Pinterest blossomed. Flickr should, by any measure, be what Pinterest is today yet lack of imagination, the constraints of a rigid business model, and a product effort that can be kindly described as anemic all conspired to kill Flickr (and it is) while Pinterest created, potentially, billions of dollars in shareholder value.

How can anyone at Yahoo escape the question “how did you let this happen and what are you doing to fix it?”. The Pinterest logo should be pinned on every executive at that company to wear as a red pin of shame.

Facebook Questions

Facebook launched a really interesting Questions product a few days ago and after trying it out I have a couple of thoughts on it that I would like to share. Simply put, this service builds on a well documented user behavior exhibited by millions of Facebook users who on a daily basis poll their “friends” using status updates that are questions.

Facebook Questions enables individual Facebook users to ask questions that are then displayed in the public news feed. Replies to the question are threaded under the originating question and the whole feature area is exposed to Facebook’s search function. Anyone viewing the question and the threaded answers can click on buttons to indicate whether or not the question was “helpful” or “not helpful”.

The integration of the feature (service?) is in the sidebar, the news feed, profile area, and a new Questions feature area devoted exclusively to Questions content. BTW, I really don’t know the vocabulary that Facebook uses in reference to their user experience, any online links that lay it out would be appreciated.

Question is not something that companies can readily take advantage of because Questions is not integrated with Community Pages. Each question that is launched also exists exclusively within in full public view, meaning questions cannot be directed exclusively at the follower community for a particular profile.

More significantly, Questions focuses on questions with light, short-form answers, and what that means is that Questions is not applicable for use cases like customer support and social commerce and while there is a “helpful” and “not helpful” button on each reply the fact remains that this is not outcome oriented and no “official answer” capacity exists. In other words, there is no capacity for a customer service rep for a company, in the case of a service and support use case, to act as a moderator for content concerning their products.

While the above is all true I don’t think it really matters to Facebook because they clearly have not conceived this service to be a company-to-person communication tool but rather a person-to-person one. They are committing that Questions will be available in community pages and have an API, but that is a future deliverable and if history is any guide… subject to change.

Facebook has two very distinct competitive targets with Questions, the first is obviously Google. A significant percentage of the searches performed on Google and other search engines are short form questions, as in “what the best taco truck in the Mission?” and “who is the guy in the Dos Equis commercials?”. By excluding Questions from search indexes Facebook is clearly indicating that they want that search traffic to occur inside Facebook rather than in a search engine that brings a Facebook user in.

Facebook’s product roadmap is an all out assault on search engines and by establishing a primary objective of diminishing search engine importance in connecting people with Facebook content. They very clearly has stated that they want people to dwell inside of Facebook longer and use Facebook’s search capability to find content, Questions is a powerful weapon in their arsenal.

This product also represents a symbolic defeat for Microsoft with their very highly regarded Bing search service… it was Bing who first went all out with an ad campaign highlighting the weakness of search as a “decision engine”, which is another way of highlighting the importance of the Q&A search behavior. If anyone should have launched a large scale Q&A service around a search engine it should have been Microsoft… once again snatching defeat from the jaws of victory.

The second category of competitor is the dedicated Q&A site, of which Quora and Hunch figure prominently as well as Google’s Aardvark and Yahoo’s relaunched Questions service. it’s not unexpected that the Q&A sites have articulated a spectrum of reasons why what Facebook is doing is not competitive with them but I really don’t think they believe that because it very clearly is competitive.

I really like Quora because they have a kick ass user experience and some remarkably good algorithms for suggesting people I should follow as well as building my own follow community. However the thing about Quora that wins hands down is the quality of the content, which is no doubt a reflection on the quality of the user community that they have attracted. Over time this is harder to sustain while at the same time Facebook’s Questions corpus will feature higher quality providing they work on the mechanisms for enabling efficient surfacing of good content.


I like Facebook Questions a lot but am also pragmatic enough to recognize that it has some pretty big limitations when it comes to anything but person-to-person Q&A interactions, and their strategy of excluding external search from the content is also a risk because even the most die-hard Facebook users have ingrained behaviors that involve external search for finding content. Facebook’s search is good but it’s not the one I reach for first when looking for something.

Gannett Acquires Majority Stake in CareerBuilder

This is really interesting because Gannett is not part of the Yahoo Newspaper Consortium which syndicates Hotjobs content to member newspapers, well over 400 newspapers who are co-branding Hotjobs content. Gannett along with a handful of the other big media companies setup a shared ad network and are angling to take on information services syndication across newspaper sites which in effect compete with what Yahoo is doing with the Newspaper Consortium and CareerBuilder would be a cornerstone of that effort.

Gannett, Tribune, and McClatchy have co-owned CareerBuilder so the actual transaction side of this deal is ho-hum, if anything it appears simply to be a case of Tribune raising some cash.

Gannett (NYSE: GCI) has acquired an additional 10 percent stake in CareerBuilder from the troubled Tribune for $135 million. That gives Gannett a 50.8 percent controlling interest in the online jobs site. Tribune, which has been trying to find ways to turn around its financial and debt woes, now owns 30.8 percent of CareerBuilder.

[From Gannett Pays Tribune $135 Million To Acquire Majority Stake In CareerBuilder |]

More on this topic (What's this?)
Gannett (GCI) leaves dividend unchanged at $0.40/quarter
Creative Destruction At Work In Media Industry
Worst Performing dividend stocks so far in 2008
GCI Plans New Hedge Fund to Snap Up Hybrid-Security Bargains
Read more on Gannett at Wikinvest

Icahn’s Rat Pack

Kedrosky is right, this is by far the most humorous take on Icahn’s proposed slate of directors:

Sake Oil – aka Mark Cuban: a An entrepreneur with a history of creating companies that he then sells for far more than they are worth to sucker corporations. Cuban sold to Yahoo for $5.7bn at the height of the dotcom bubble – useful experience for selling Yahoo to Microsoft.

Although while this is clever, they did miss tying it to another movie with their Independence Day reference in the final paragraph, something about hacking into the mother ship with a trojan horse, planting a virus, then escaping just before it explodes.

Yahoo Retake

I’ve been thinking about that Yahoo post I wrote last week and wish now that I had not written it the way I did. It was a great example of style stomping on substance and I should have wrote that post just for the purpose of venting the frustration I feel with the company and never hit the publish button.

Given a time machine, here’s what I would have written instead, 2 posts:

1) A post dealing with the massive frustration that I and countless other Yahoo shareholders feel about the Microsoft deal gone bad.

2) I could have dug up some of my old posts on business development in big companies. The reason why big companies rarely partner successfully with smaller companies is the mismatch in both urgency and the scope that is required to make things interesting. This could be a good post if written in the context of a single company, such as Yahoo.

At any rate, I’ve had several people comment privately to me that even though I was aggressive I was substantively right on, but in the final equation that matters little because I felt wrong after reading it. I am turning off comments on this post because I did not write this for anyone to comment, this is me owning up to a mistake I made, so I’d rather that no one comment on this post (I can’t figure out how to turn off comments on a single post with IntenseDebate).

More on this topic (What's this?) Read more on Yahoo!, CLP HLDGS at Wikinvest

Yahoo, Dead Man Walking

I had a meeting at Yahoo on Friday afternoon. It was like the other 1,835 meetings I’ve had there over the years, it also won’t produce anything meaningful.

What struck me about the meeting was how little energy there is on that campus, it’s a dreadful place to be, even if just briefly. The other folks in the meeting just went through the motions. I saw the look in their eyes and knew what it meant, that “even though this may be a good idea, it ain’t gonna happen for reasons we have no control over.” In retrospect, I wish they just came out and said that from the get-go, we could have saved everyone’s time.

One guy replayed the talking points of the day, that the last couple of months have really brought the people together yada yada yada. I was almost waiting for him to refer to a “the experience of being in a forge” or some other metaphor meant to convey a toughening in the face of challenging times. I just kept thinking that as a Yahoo shareholder I wish they got off their asses 2 years ago and figured out how to work together better.

I actually sat there kind of speechless as I repressed every fiber of my being to not say something when he went on to suggest that the executives and Board were doing a great job at building more value through their negotiating tactics… I should have said something, it would have cut the meeting short.

The advice was given to me that we should develop on some of the Yahoo technologies to build goodwill because “that gets people here interested”. That’s all well and good but I’m not inclined to invest my scarce development resources on a development exercise who’s sole purpose is to prove I’m serious. The days when I’ll trek down to Yahoo HQ and prostrate myself on the steps and wait with breathless anticipation for a hand to reach down to annoint me the chosen one are over… even Google doesn’t make me do that.

Lot’s of bus dev people like to suggest that you should develop with their technologies to get things going and it’s always bullshit. It’s an excuse they use to mask their ineffectiveness at the hands of a silo’ed and bureaucratic organization. Yahoo is about as silo’ed as they come.

Yahoo! Open Strategy was referenced a couple of times, or rather “YOS” in Yahoo geek speak. It’s pretty evident to me that this initiative is going to have Yahoo out in the weeds for the next 3-6 months, providing yet another reason for me to not invest more time trying to do something with them. Basically the company has pinned their entire future on something that is yet another technology exercise and a promise to rewrite Yahoo, none of which will solve the basic targeting and measurement problem that Yahoo has been struggling with for years. I thought Panama was going to fix that… but now it looks evident that Yahoo will give up on that and outsource search advertising to Google… awesome Jerry.

Yahoo says it wants developers to build to their platform, my experience suggests that their desires simply are not matched with incentives and initiative that is required of them to do it. Given the way these businesses inside Yahoo are run, I’d be surprised if they can get all of Yahoo on the same playbook in 6 months.

There’s still a chance that the Microsoft acquisition could get done, the investors (me included) are ready to feed Yang and Filo to the wolves and the fact that the stock dropped to a level that is still well above the price when the deal was first announced, well that suggest the Street is hedging on the possibility that this could still happen. I think Ballmer is done, that he sees the dysfunction that is this company and realizes he was about to bite off more than he could chew.

Microsoft gives Yahoo deadline for merger deal

I predicted this from the outset. Yahoo’s board has been negligent in their duties, fiduciary and care, in that they have sat around for 2 months hoping that something better was going to come along or that some miracle would befall the company and performance would rocket skyward. Meanwhile in the absence of any competing offer, or even serious rumor of, the company now has less leverage than when the offer was first announced. Microsoft can’t possibly allow them to simply not respond with a counter offer, else MSFT would find themselves forever impaired in any future M&A negotiations.

I think everyone understands that this is an emotional period for Yahoo given the history of the company, but unfortunately for them this company is owned by shareholders, a very large number of them outsiders, who expect a return on their investment when the opportunity presents itself.

Microsoft Corp. ratcheted up the pressure on Yahoo Inc. Saturday to accept its blockbuster takeover offer by giving the Sunnyvale Web portal three weeks to sign a deal or face a hostile acquisition bid.

[From Microsoft gives Yahoo deadline for merger deal]

Yahoo! — Putting the “Open” in OpenSocial

Great news for Yahoo and even better news for OpenSocial, possibly even eclipsing the coup that was getting Myspace in. Given the momentum that OpenSocial has right now in terms of container support, it’s hard to imagine that much will happen to slow it down this year. Competing initiatives, like Insoshi, just don’t have the geography coverage that Google does and in that absence of homegrown initiatives at any of the big container partners, it’s likely they will throw their full weight behind OpenSocial.

I ran into Kevin Marks last night at a social event and we talked a little about this. I would look for the emphasis to shift to app developers and marketers who wish to add a social aspect to their projects and are increasingly realizing that just “being there” is not enough of an answer. For app developers, there needs to be a focus on lowering the cost of porting from one platform to another, and one container to another, which is often assumed to be a freebie.

For those of my friends who’ve been wondering what I’ve been so heads-down on lately, I’m happy to finally share the news that Yahoo! has announced support for the development of OpenSocial, by working with MySpace and Google to set up an independent foundation for its long-term stewardship. I hope this will turn out to be OpenSocial’s best “container” yet.

[From Greg Cohn’s Weblog : » Yahoo! — Putting the “Open” in OpenSocial]

Yahoo’s Three-Year Plan: Grow Revenues 73 Percent

It would be easy to look at the plan Yahoo put out and suggest they are smoking crack. Seriously, if they could grow revenues to the degree that they are projecting in this economy, they are superstars in my book.

Of course if they did I’d be inclined to suggest that Jerry Yang is actually Eric Schmidt walking around in a Jerry Yang bodysuit. I just don’t see this company achieving those numbers AND adopting a super lean cost structure that would have to be part of the equation. A question that a lot of people have front and center is If they could put up those kind of numbers, then why haven’t they?

This plan is less about what Yahoo can really do and more about justifying a higher acquisition valuation.

Yahoo is projecting revenues after traffic acquisition costs (TAC)—i.e., what it shares with other Websites that run Yahoo ads—to grow from $5.1 billion in 2007 to $8.8 billion in 2010.

[From Yahoo’s Three-Year Plan: Grow Revenues 73 Percent By Focusing on Display Ads, Mobile, and Better Search]

Yahoo Board To Determine Fate Of Company Today

Mike offers a pretty good analysis of the current choice that Yahoo is facing. One thing that really represents the strategic blunder on the part of Yahoo’s Board is that they allowed a full week to pass without substantive comment or marketplace movement and that only reinforced the point that nobody outside of Microsoft wants this company. It is sad to say this, but that doesn’t make it any less true.

At this point Microsoft could lower their bid and still get this company. Not only does Yahoo have no leverage, as Mike points out, but they actually have a much weaker position than they did last week given the level of outsider investor control over the stock. If I were contemplating a shareholder lawsuit I would argue that the Board breached a number of duties that ultimately led not only to a loss of shareholder value through the operations of the company (which happens, let’s not go overboard) but more directly through their dysfunctional response this last week.

This is emblematic of Yahoo in recent years, despite having loads of cash they could never achieve focus and/or remake the company in a new image. Some would argue, and it’s a valid point, that they company didn’t need a makeover, what it needed was a shared sense of purpose that drove the majority of their business decisions. Who knows but those inside the company.

But before we pile on the criticisms we should look at the positives here. Yahoo’s brand is outstanding and the company has accomplished much this far, not the least of which is building a company worth $43 billion to Microsoft. Despite having the public optics of the Keystone Cops, the management team did deliver 10% operating margins and a 7% return on equity, as well as a very stable balance sheet, in a very competitive environment.

Lastly, what will be interesting to watch is whether or not Microsoft actually follows through on this bid.

Sources have indicated to us that Yahoo has scheduled a special board of directors meeting on Friday to determine, effectively, the fate of the company. After a week of hectic negotiating, it’s clear that no one is going to step in with a competing acquisition offer to what Microsoft put on the table last Friday – $31 per share. Softbank, the last real chance for a competing bid, bowed out today and said they would not be challenging the Microsoft offer.

[From Yahoo Board To Determine Fate Of Company Today]

More on this topic (What's this?) Read more on Yahoo!, Microsoft at Wikinvest