With much anticipation, Monday brought the now annual ritual of iPhone day. The tech blog coverage was predictably deafening yet little has so far been said about the rabid stomping elephant in the room. I’m talking about the passive aggressive counter-attack Apple launched against Google.

The iOS 4 was previewed on April 8th and the first move into Google territory, the iAd network, was announced. Jobs’ justification was rightfully that Google made the first move and Apple is just protecting its turf. And if you step back a bit, what Google pulled was in fact an appalling betrayal. Schmidt should have resigned from Apple’s board much earlier. Android was almost ready for primetime by the time he finally did (or got booted, the real story will come out one day).

With the official unveiling, Jobs also pocked Google in the eye by adding Yahoo and Bing to the web search options. And literally added insult to injury by quoting a developer that made more in one day selling an iPad app than in five years of Google ads on his site. (This brings up the brewing debate of app economy vs. web applications which I’ll leave for another post.)

In an effort to find the next cash register, Google has overplayed their hand. (See my comprehensive Google retrospective perspective.) The Nexus One failure must have hurt (Google’s first and likely last foray into hardware and direct sales that was recently abandoned, if you are not familiar). Google is not a company that is used to such grand failures (unlike Microsoft in the last decade). And now they’ve really pissed off one of their most important allies. Android will be a force to be reckoned with for sure, but the complete seamless package of perfection that is iPhone it is not. And there is no way a software company, any software company, can compete in the hardware game with Apple.

Apple knows that for a new product to succeed it has to be twice as good and half the price. Given that often their products are far better than twice as good, they can actually charge a premium. When Microsoft try to unseat the iPod with a slightly cheaper, incrementally better device (minus the iTunes ecosystem) they weren’t shinny enough to get consumers excited. And just when they thought they had the better device, here comes Apple with the next generation announcement that rose the bar that much higher. The same thing just happened with the Android update announced only a few weeks ago that measured itself against the one year old iPhone experience. They didn’t expect Apple to announce the next leap in June just like they’ve done the last three years in a row? For someone to be an Apple-anything killer, they have to out-innovate by an order of magnitude not by a series of incremental feature-matrix checkboxes.

Google’s gone from a company that was unbelievably great at their specialty product to attacking other businesses at all costs. The true cost in this whole debacle is their fading halo of “do no evil”. They are the new Microsoft. And I hope that Jobs learned his lesson the first time around. (Watch Pirates of Silicon Valley if you need a refresher.)

Entrepreneurs are not usually motivated by (just) money. Trust me, there are far easier and more stable ways of making a living. They get their drive from solving painful problems. This unique value system sometimes makes it hard for us to understand why someone would go slave for a paycheck at a job they hate.

Daniel Pink’s book “Drive” has been on my to read list since it came out… and here is him riffing on some of the core concepts.

Full video of my talk on lessons learned starting a startup. Presented at Silicon Valley Innovation Institute – May 5th, 2010 (Palo Alto)

Boring slides:

It was not that long ago when a company founder being put in charge of partnerships was seen as a snub. A largely undefined and unmeasurable role which signaled that the person was being put out to pasture and retained only a maskot importance to the organization. Today this is one of the most important roles both for marketing and product development.

In 2010 successful brands are sensitive to the fact that reputation can be one of the most powerful marketing tools. Effective partnerships create associations with an established brand and align outsiders’ interests to contribute. At a time when winners take most; these collaborations often build effective teams to collectively gobble up mind share (and ultimately the available market).

In the software world, publishing an API is done to solicit partners. To get successful adoption you have to offer something of value to the prospective partners: content, audience and/or functionality. When done right, the integrations (or mash-ups) can create great synergies. From a strategic standpoint, they serve to cement a market position and tie up the influencers in the space – if nothing else, to take away those opportunities from competitors.

This democratized approach has taken-off by necessity in the last few years. Scrappy, lean startups couldn’t afford to do everything on their own and instead teamed up with others to fill up the margins. Companies with viable stand-alone plays were able to partner with others to create more complete solutions.

A great example is the integration between MailChimp (email marketing) and Highrise (CRM). Where the two relatively small companies are giving users a great combination that helps trump the offering from ContantContact (email marketing marketing leader) and SalesForce (CRM market leader). There are a multitude of other factors that help besides this integration, but it all adds up.

Another example is Evernote’s (note-taking application) herculean partner effort. With large established hardware players, they gain an install base. With similar-sized software companies Evernote benefits from their evangelism and additional functionality while providing access to their 2.4M+ userbase.

Since “no one is as smart as all of us”, the outcomes are usually better executed and more efficient than any well-funded company could put out on its own. This also allows companies to focus on their core value proposition and rest assured that the incremental benefits of tangent features can still be reaped.

For the last decade I’ve been a project and product mercenary. I’ve ran an agency, where our job was to cut through the noise, identify the customers’ marketing and/or technology goals and plot courses for solutions. I’ve also been involved with a number of start-ups looking for answers on macro and micro levels. On the macro level in defining a set of goals, in the form of problems, to (re)solve and build a business around. On the micro level, making a multitude of daily design and intent decisions. The quality of those decisions driving execution and bridging the gap between talking about it and doing it.

Art is self-expression. Decoration is stylization. But design – by definition – is finding a solution to a problem.

When people talk about “design” in a visual context, many times it gets confused with “art”. And art does not solve a problem. In fact, a lot of people that call themselves designers are not particularly interested in solving (let alone defining) a problem, rather they are interested in imposing their visual aesthetic on the given medium. This is the precise path for form to overwhelm function.

It is true that visual appeal is important in many design disciplines (part of the solution). Graphic, user interface and architecture are some examples. However, having to solve a problem is the universal design principal that expands to all design processes. Software architecture, business process and even plumbing

All design is problem solving, but often times the problem is not clear enough to start throwing solutions at. This happens far more than people are willing to admit or bother to analyze.

In the last couple of weeks, while thinking about this article, I’ve been keeping a mental tally of the problems I’ve been asked to solve. One friend asked me to design a flyer for his new business. Another asked for feedback on an announcement email blast. I’ve also been working on a presentation to make the case for a partnership with a large company. In all cases, clarity was achieved and each project was positioned for success by first and foremost defining the problem.

With the benefit of experience, I’ve been able to whittle down the problem definition process to three basic questions:

Who is your audience?

What’s in it for them?

What do you want them to do?

Simple and to the point. The answers are your problem set. You can measure each attribute or component of the project/product/process at any one point to those answers. Anything that doesn’t answer those questions is likely unneeded noise and has no place in the ultimate solution.

Got some insights? Disagree? Comment below.

I was originally intending to post this at the beginning of the year but I’m glad I waited, or rather procrastinated – there have been some noteworthy developments on the topic. I purposefully left out the multitude of outside references in this article – as it would stretch this lengthy post into a book. If you are interested in digging deeper on any of the topics, I welcome your emails and comments below. For the insiders, I would expect, the points made are not mind-blowing but I think you will find the connected dots interesting. For everyone else, it is important to know where your personal data and the industry as a whole are going. So without further ado, below is my thesis…

For the last five years I’ve been keeping a mental tally of Google acquisitions and entries into other markets. There was an article I read sometime in early 2005 about “what is Google going to do with its big pile of cash?”. In it, there was a suggestion that Google should go on a shopping spree, and so it did: 11 acquisitions in 2005, 10 in 2006, 16 in 2007, two in 2008, six in 2009 (plus the launch of Google Ventures which invested in five companies that year), and four so far in 2010. That on its own is not particularly interesting – after all public companies need to show consistent growth quarter-to-quarter and M&A is a textbook method to doing so. There are of course subtle nuances in this case, as Google’s core product was/is still a revenue rocket and they were buying mostly pre-revenue companies.

The interesting part comes in the fact that Google’s strategy is to apply their asymmetric (where the advertiser pays for the customer’s experience) revenue model to 95%+ of their products. This is of course innovative and in many cases (YouTube) only profitable at their massive volume of eyeballs. However this practice has began to cross the monopoly line and is certainly antagonistic to Google’s “do no evil” quasi-slogan. One more obvious place was the Google Maps (free) GPS vs. all the one-product GPS companies. More on that a little later.

For those that were “in the industry” in the 90′s, all of this should sound familiar. The way Microsoft fairly/unfairly dominated the desktop market in that decade, Google has positioned itself in an almost insurmountable fashion to dominate your online “desktop”. As the transmissional bandwidth (your Internet connection speed) catches up to computational bandwidth (the speed of your computer); it is a well understood reality that you will be doing increasingly more, and eventually all, of your computing in the browser. Even Microsoft is now struggling to catch up by releasing “cloud” versions of Office Live and other less important (to their revenue) products.

What is really interesting to me is just how much Microsoft’s 90′s and Google’s current play-books overlap. Google is systematically reapplying market block strategies of the past and rather quickly converting major software categories to ad-based. One could argue that this is quite scary to watch; because so much of how the world works today and even more so in the future, is rooted in the information economy. Star developers are already calling Google “The Man”, much like they did IBM in the 80′s and Microsoft in the 90′s.

So let’s take a deeper look at some specific examples:

Windows vs. Chrome Browser to Chrome OS
The most obvious and probably most important long-term online strategy for Google is the Chrome product line. With Internet-based media consumption already a dominant consumer activity and the migration of commercial data storage/management to the cloud accelerating; the browser has become the single most important software application. So appropriately, Google has gotten into the game by introducing the Chrome browser to control the experience and more importantly the “search” function. In their typical fashion, Google introduced a great product that is superior in usability. As far as users are concerned usability IS the product and this explains its quick rise in popularity. Chrome is only second in adoption rate to Firefox which was the original Explorer alternative and more of a reflection on just how bad it was/is.

The next step is the Chrome OS. This is Google’s response to the rapid growth of netbooks – which underscores my earlier point about consumers’ activity now being primarily in the browser. It seems logical to simply bypass the OS and go straight to the browser. Versus the needless complexity of maintaining a legacy OS with a browser stacked on top. To this point it is has been an easy way out because consumers are used to Windows and accept changes incrementally. Plenty of radical solutions failed to get adoption in the marketplace because consumers were not able to make the switch overnight. Now that the public has been gradually warmed up to the idea, Microsoft has to play defense to keep selling OS licenses and stay in the game. Meanwhile Google gives away the OS open source and monetizes the web traffic. Coincidentally, this is the raison d’être of the iPad. If the trend continues on this trajectory (and there are only indications that it will execrate), in 5 years, Chrome OS driven by it’s ad model should own ~80% of the consumer market while iPad-like devices will control the non-web application supply chain and own the premium 10-20%.

Windows Mobile vs. Palm vs. RIM vs. iPhone vs. Android (+ Google Voice)
After a decade of halfhearted efforts by Microsoft, Palm and RIM; Apple came in and made mobile important. Not from the standpoint of making phone calls, but as an indispensable computing platform with a clear place in people’s lives today. Google recognized the significance of this early and (rumor has it) has been paying Apple ~$100M per year to be the default search function in iPhone’s browser. Lately rumors have been that Apple maybe letting Microsoft take over the search function as it has become apparent that Google is a bigger threat to Apple’s iPhone than anything else.

Last year, with much fanfare, Eric Schmidt removed himself from Apple’s board. This was quickly followed up with the introduction of the Android mobile platform which seeks to displace Microsoft as the operating system of choice for hardware providers without their own mobile OS. The allure here is strong: solid platform, developer community, and it’s open source (free). How would any hardware manufacturer chose to pay the Windows Mobile license instead?

It is a different strategy than Apple’s typical unified software/hardware approach but has an even bigger place in the market as it will be disseminated by numerous hardware partners into all markets. There is of course the strange anomaly of the Nexus One handset Google introduced. In my opinion, it is an egotistical move to raise the standards for their hardware partners. Perhaps brilliant and something Microsoft should have tried all those years they blamed their short falls on their hardware partners.

The addition of Google Voice (by way of acquisition of Grand Central) to the mix changes the game. In this case Google is trying to control the “last-mile” of your phone experience (voice and SMS), disrupting the typical use cases in both mobile and landlines. Again, whoever controls the user experience, in the customer’s eyes IS the product. It is yet to be seen how this will play out but Apple has considered Google Voice a big enough threat to famously block it on the iPhone.

Some things are certain. Microsoft forfeited its leadership position in the smart phone market as Steve Balmer dismissed the iPhone in 2007 as an “expensive toy”. They then took three years to announce their catch-up strategy which will only be available at the end of 2010 and has already pissed off many of their loyal users (and not to mention decimated their sales for the rest of the year) because it won’t be compatible with existing devices. After a decade of selling the same exact OS, Palm made a valiant comeback effort but failed to get their partners, customers and would-be developers excited. Too little, too late and I’m afraid recent developments (missed earnings expectations, etc) demonstrate that they may be out of time. RIM has been iterating pretty regularly with its onslaught of handsets and improvements to the OS. They act like they are safe with the core business demographic – all while Apple has removed all the perceived obstacles (enterprise email, security, etc) towards that market and has been eating into it consistently every quarter. So while Apple did the heavy lifting and cleared the field, Google timed Android quite ideally. Pretty soon it will be down to them with RIM as a possible (distant) third.

Also, yet to be determined, the effects of Apple’s patent infringement lawsuit against HTC. HTC is the biggest Android hardware partner and the move is largely seen as a proxy fight with Google. Get your bag of popcorn.

Microsoft Exchange vs. Google Apps
After famously missing the internet wave in the mid-90′s, Microsoft put its online strategy into turbo with the Explorer vs. Netscape war. They won that war and Explorer then languished for years as stagnant monolith without competition and a need to innovate – but that’s a different story for a different post. What is not as much talked about but has proven to be a major cash cow, is Microsoft’s industry-standard combination of Outlook email client and Exchange enterprise email server. In fact it is so important that it consistently serves as one of the last dams to keep business users from pouring out and converting to Mac. Many business users are still hooked on Outlook but the real reason the product has been so ingrained is the average technology complacency of a corporate IT team. To say that this is a linchpin product for Microsoft would be an understatement.

Google’s Gmail started out as a Yahoo and Hotmail competitor which set out to do free email in a different and better way. The most obvious difference was of course the way emails and replies were organized into much more logical groups or “conversation”. The other incremental differences added up to a superior product: better spam protection, faster response time, simpler user interface, more natural user flow, considerably more (free) storage, more open architecture that played better with other products, etc. Very quickly Gmail stood up to be noticed and is to this day growing much faster than any other service in the space. This of course means they will likely one day take over the leadership position in this category as well.

As enterprises became more comfortable with the notion of storing their data in the cloud, Gmail was released as part of the Google Apps product line and offered as a great way to have hosted company email. The basic service (ad supported with enough space for 95% of typical email users) is absolutely free and takes minutes to setup. The premium service is just $50 per user per year. As an alternative to the cost and headache of setting up and maintaining a Microsoft Exchange server on your network – there is simply no competition. Some of the biggest customers are Genentech (~17,000 users) and City of Los Angeles (~53,000 users). If it is good enough for them, it is most certainly good enough for the countless five person shops.

Microsoft is now again playing catchup by improving Outlook online (which foolishly tries to emulate a desktop application user interface). I’m sure they must be sweating bullets knowing what will happen if/when Outlook looses all of its magic power over business users. Yet another example of how Google is decimating a previously insurmountable competitor by applying its asymmetric revenue model (in the case of the free version). So far only Google has been able to finely optimize the model and combine it with massive scale to make a massive profit. Others can’t even come close.

Microsoft Office (+ Adobe Creative Suite) vs. Google Docs (+Picasa, +Picnik)
It is no secret that Office is Microsoft’s cash cow. Before the internet, word processing and spreadsheets were the killer apps – applications that hands-down beat the alternative (typewriters, calculators, etc). They inspired business, as well as the long tail of consumers, to fulfill Bill Gates’ dream of a computer in every home and on every desk. Desktop publishing is really an extension on the same idea. Adobe having originally built a business on Postscript (a revolutionary leap in computer-to-printer communications), made its real money on desktop publishing and the democratization of design tools.

The importance of these two product lines cannot be ignored and will remain key well into the future. One could argue that all media creation tools come from these roots and the harvest is today’s obsessively media producing/consuming society.

This is why Google Docs is the dark sheep of Google’s App strategy. The superior email functionality is doing a great job of drawing business users in to a free Google Docs account. It is a great passive way to introduce the concept of Office in the browser and file storage in the cloud. As users become more comfortable with the model, they will already be ingrained with Google Docs.

Google’s acquisition of Picasa in July of 2004 is largely misperceived as an answer to Flickr. Misperceived because Yahoo only acquired Flickr eight months LATER. It is a natural next step to move on to image creation and other more complex media. Google’s recent acquisition of Picnik, an online image editing tool, underscores this strategic direction. So while Yahoo bought Flickr for the mass amount of user generated content, Google is working on enhancing its media creation tool strategy.

Google’s ultimate goal is to get users used to the idea of creating increasingly complex media in the browser and to remove the need for local storage of data. Not only will this allow them to monetize each user more but it will let Chrome OS completely displace Windows!

MSDN vs. Google App Engine
Another key to Microsoft’s success and dominance in the 90s and early 2000s was the Microsoft Developer Network. A program that fostered and supported developers and IT professionals using Microsoft technologies. A place to get free or cheap software and marketing resources. A place to become a certified IT profession in Microsoft’s unnecessarily complex technologies and their maintenance. From the perspective of developers MSDN was the grand daddy of the Apple App Store.

Enter the Google App Engine. A place to build and host your web applications for free. Which, as of this week, now allows you to sell your applications to Google’s 20+ million Apps users.

On the surface this is certainly notable. Behind the scenes it is even more interesting. The current generation of developers is far more interested in building web and mobile applications than desktop applications. Microsoft has lost the war for web servers to an array of open source Linux based operating systems. In result, Microsoft’s web application technologies like .NET are fading and their database products can’t compete with neither the open source or high-end commercial products in the space. Microsoft has simply lost its appeal to the current generation of web developers. Google Apps, on the other hand, launched with support for their technology of choice Python later adding Java – both are agnostic platforms that have wide spread adoption. They will no doubt add support for Ruby and whatever else comes along in the future.

Everyone copied Apple’s mobile app marketplace strategy and Android is the only one that came within an order of magnitude. RIM and Palm have largely failed to get developer support while Microsoft Mobile is starting over. Google’s is applying this strategy and attempting to control the developer community for web applications with a similar intensity. Free hosting and access to 20+ million users is a pretty good carrot to start.

PayPal vs. Google Checkout vs. Facebook Payments (coming soon)
Online payments is an area Microsoft hasn’t really gotten involved in. Maybe they feared the backlash associated with consumers feeling like they are literally giving their money to them. On the other hand, PayPal didn’t enter the market to compete with traditional merchant processing. They originally envisioned a novel way to share costs with your friends, hence the name Pay Pal. Square, with Twitter’s inventor Jack Dorsey at the helm, are essentially chasing the same problem – a less painful credit card payment process designed for the long tail of transactions in exchange for a higher fee than with a traditional merchant account. PayPal stumbled onto a bigger problem and ultimately built a business on small online merchants who needed to accept payments faster and easier.

PayPal’s popularity with eBay sellers directly lead to them being acquired by eBay in 2002. No doubt their original plan was to go public, but in the tech nuclear winter post-2000 eBay’s $1.5B offer was too much to pass up. Under eBay’s management PayPal has pretty much stayed still. It served its purpose to solve the transaction problem for eBay but didn’t grow a whole lot outside of those walls.

Meanwhile, Google realized that most of their ad revenue is transactional. Merely a first step in driving buyers through a buying cycle, which concluded with a purchase. This is Google’s single most lucrative product. So why not make it even more profitable?

Google acquired Urchin in 2005. What before was an inexpensive and popular analytics package was relaunched as Google Analytics and became free. Users rejoiced, but online marketing insiders were shellshocked. Google was then able to collect detailed traffic information on entire categories of websites, including online stores. Where before Google advertising worked like an auction, and given good conversion (from visitor to customer), a knowledgeable marketeer could do really well on their margins (cost of acquiring the customer vs. profit margin on the sale). Now, Google knew intimate details of how that traffic was interacting with the target site and could make a more accurate guess on how much that traffic is worth. All of a sudden those minimum bids were on the rise, and in some categories like mortgage leads, they became astronomical.

Almost exactly a year after buying Urchin, Google Checkout launched. An alternative payment gateway to traditional merchant accounts and PayPal. Users were lured with a more seamless experience and merchants with lower fees and better presence in search results. Now, Google knew exactly how that traffic converts and what it is worth to those merchants. The circle was complete.

Google Checkout never took off like a rocket, but it has enough of a cross-section sample to be able to measure what the advertising is really worth to many product categories. Without a doubt, it is an important tool in maximizing Google’s profit on its core advertising product.

Enter Facebook payments. So far, this has been somewhat under the radar but it is a potential threat to Google’s core. Facebook’s 400 million users now spend more time there than elsewhere online. Those users’ general activities are now more-and-more originating from Facebook. In a sense, it is becoming a layer of abstraction on the internet and recreating a structured experience reminiscent of Prodigy and AOL days. Facebook knows infinitely more about each user from their (volunteered) detailed profiles and content. Google is mostly guessing based on behavior. The Facebook payments system will become important as users get more comfortable with commerce on the site – at which point the advertising will be much more accurate as the ad targeting can be far more narrow and specific.

For now Google is safe, as most of it’s ad revenue is driven by users who are seeking out products and services to buy. Very valuable traffic. On the flip side, Facebook’s traffic is only now being groomed to think of ecommerce as part of the experience. Google will need to get more social as these trends shift in the next couple of years (or less). Hence Google Buzz (social media aggregation) and Google Wave (online collaboration and email evolution experimentation).

Facebook vs. Twitter vs. Google Buzz
As Gary Vaynerchuck puts it: advertising goes where the eyeballs go. For the better part of the last decade, social media has taken over more and more of the online conversation. During the first wave companies scrambled to build portals and invested heavily in producing content to keep users interested. Web version 2.0 has been defined by companies providing a platform for users to generate their own content and share it with the world. The growth of information and interaction quickly became exponential. Although one could argue that the average quality of content turned into drek, the model did allow for tools to mature and the volume of information to explode.

All this has doubled the average American’s time online to 13 hours a week in just 10 years. Teenagers now spend 31 hours a week online. And the information class spends well over 40 hours because the Internet is an intimate part of their personal and professional lives. In contrast, an average American watches about 37 hours of TV a week. The gap is quickly closing and the lure of interactivity is the culprit. This doesn’t even take into account the explosive growth of Internet use (and broadband penetration that puts US to shame) internationally. As of 2009, there are officially more people online in China then there are breathing and breeding in the US.

What everyone is doing online is creating and consuming content in an infinitely trackable and monetizable manner. Facebook now has 400+ million users and Twitter came out of left field because they stumbled upon a format that allows people to better peacock within the typical short attention span threshold. Little bursts of information along with the “likes”, fan pages, comments, status messages, photos and location check-ins that together build a very accurate user profile to better sell products and services to. Professional FBI profilers must be enjoying this.

You’d have to say that Google got its toe in this water first with Google Groups, a service that allows for online collaboration and information sharing. It was a copy of Yahoo Groups, a successful service that started life as ONEList, merged with eGroups and was bought by Yahoo in June 2000. Yet another company that was well on its way to go public and end-up having to sell to one of the majors. This case is yet another example of Google iterating and improving on, what before that was seen as, an industry standard product/service. They are hoping to replicate that success yet again, this time with the social network category.

Facebook pioneered, and recently received a patent award for, the timeline. In essence it is a sequential list of all the changes, additions and updates in your social graph. Before this, one would have to go to each of their friends profiles to see if/what updates have been published. The timeline includes comments, changes in relationships, new uploaded media, etc. Twitter came in with a basic thesis of distilling the entire social network into a linear feed of messages and the concept took hold. Facebook then tried to buy Twitter and when that didn’t work they simply copied their keys to success and made adjustments to the core timeline functionality. Since then the feed or timeline concept has become the core of all social networks.

So here comes Google with Buzz, an attempt to harness the social network/media aggregation unobtainium – to not only make a useful place for users to combine their social interactions across all sites but to ultimately replicate all the compelling functions and hijack the leadership of the space. It’s too early too tell if they will be fully successful but the community has already embraced this product quickly despite privacy concerns and other negative factors. If some no-name startup achieved the speed of adoption and PR associated with Buzz, they would be called the next Facebook or Twitter. In Google’s case they made it look easy.

Yelp vs. Foursquare and Gowalla vs. Facebook Check-ins (coming soon) vs. Google Local
So where does social media go next? It goes with you and it becomes local. Certainly we’ve had access to all of our social network data on mobile phones but relevancy of data changes based on where you access it. The mere fact of where you are when you are sharing your status, pictures, or opinions is an important data point on its own.

Yelp is a wildly successful business built around user generated reviews of local products and services. It is the business that Craigslist should have been and would have been if it had management that was more smart, more humble and less lucky. Yelp took the first big steps in putting local on the map.

Foursquare and Gowalla debuted in March of 2009 to take local to the next level. They combined people’s undying desire to share and pointed it towards physical locations and events. Foursquare made it into a game where users can earn status and bragging rights by visiting places more often than others or even visiting many places in one day, etc. All of a sudden the local review business evolved.

Yelp felt enough of a threat to quickly replicate the checkin function and enable it to their enormous user base. Rumor has it, now even Facebook is working on allowing this function – it certainly makes sense. We will have to wait and see if the established players can drown out the startups.

Meanwhile, Google has been adding increasingly more functionality to its now industry standard maps application. It got to the point where Google was in talks to buy Yelp for $550 million in December of 2009. That deal fell through as Microsoft jumped in the ring and offered $750 million. Ultimately it looks like Yelp wants to IPO instead. But Google is certainly not giving up on this concept, in fact, it is now circling the wagons and is starting to promote Google Local to its registered user-base and Google Maps web visitors at large. The amount of traffic that adds up to is mind boggling.

Location-dependent data is the next step in the usefulness of mobile. Which equates to finer ad targeting and better ad revenue. Keep an eye on this space in late 2010 and beyond.

GPS (many running on Windows CE) vs. Google Maps (+Google Earth)
It has only been a few years since GPS became available in cars and the world has become hooked. It is a real connection between the physical world and the world of information. GPS makers like Garmin, TomTom, and Magellan have quickly made large worldwide businesses based on these products. After all it is much easier to punch the address into your navigation or just choose a suggested destination then to go to your computer, open a browser, go to Google Maps (which already beat Map Quest and Yahoo Maps) and print out the directions.

Well, now Google Maps comes with you. The iPhone was the first to offer a mobile Google Maps applications with all of its conveniences and boundless access to current information on places of interest and even live traffic. Then came Android adding better turn-by-turn directions than any stand-alone GPS unit, and of course it is free. Next combine that experience with Google Local and your location-based social sharing. While the GPS companies need to sell you some hardware today and software updates tomorrow to stay alive, Google will just serve you some well-targeted ads.

Audi has already announced they will start implementing Google Maps as the in-car navigation software, Mercedes and BMW are not far behind. And just like that, poof there goes another business category into the Google column.

Conclusion
What I’ve outlined above is the just common knowledge of Google’s released products to date. I’m sure this is just the tip of the iceberg, let alone Google’s fantastic demonstrated ability to iterate on products and markets (with the possible exception of Orkut). Google also wants to participate directly in the electricity trade-market, using its mass volume of energy consumption to power data centers as the excuse. Google wants to improve access to and speed of internet connections by subsidizing fiber networks through out the US. Topeka, Kansas politicians even renamed the city to “Google” in an attempt to get press and to be first in line. Google is also investing heavily into bio and health information startups in an unending thirst of Googlifying all the world’s information.

It will conceivably take a perfect storm on the next generational software transition to challenge Google, and it will not be any time soon. Microsoft dominated software in a much simpler time and Google is a couple of points higher on the Richter scale of strategy and market strength. It is a monopoly play unlike the world has ever seen. Werther it is “evil” is still uncertain but it sure as hell is big and scary.

It’s a Google world, we just browse in it.

Been a whirlwind few weeks, hence my lack of posts.

Checkout my 90 seconds of fame announcing Keen Systems at DEMOfall ’09.

I’ll return to my regularly scheduled explorations and rants soon, promise!

A lot of business “thought leaders” and a lot of well respected business schools teach entrepreneurs to not be afraid of failure. They say: “fail early, fail often”. The premise makes a lot of sense – if you are terrified of failure you won’t take the needed risks to succeed. After all if you don’t play you can’t win. But this concept is flawed on a couple of dimensions.

Jason Fried, of 37signals, has a rebellious perspective on this topic in character with his company’s anti-establishment approach. He asks why failure has been glorified in the business context and states that people learn much more from success. Although I agree with the first part (over glorification of failure) the second part I believe can be a bit more poignant.

The fact that American society tries to round the corners on competitiveness and make everyone feel like a winner has been recognized as a major problem. No good deed goes unpunished and the desired effect of trying to make all the kids feel good actually has a strong negative effect on our society. Everyone grows up with a huge sense of entitlement regardless of whether people actually deserve the material goods or positive feedback that they think they do. Many times it is a gross mismatch but they’ve always been rewarded for mediocrity, so why stop now?

So in that context, “fail early, fail often” only perpetuates the entitlement myth. When in reality, failing is most times very very painful. Ask any small business owner if they are as casual about failure after they mortgage their house and pillage their kids college savings to start a business. It is easy to front-load this inspiration on young doe-eyed entrepreneurs and people that want to succeed so bad that they end up making crucial life decisions on emotion. Not so nice when you think of it this way, right?

So how can one distill good advice and motivation from this? Well, my opinion is that there is a crucial component missing in this discussion. It is the notion of “failing small”. This is not a new concept but I’m surprised more haven’t made the connection here. Failing small has another name: “experience”.

For example, when you are hiring someone, one of the most important things to look for is experience. It tells you what they’ve learned, how they’ve progressed and on what trajectory they are likely headed. And typically people put way too much stock into formal education. School will teach you what to do, but most times (at least in business) what NOT to do will prove to be the downfall. You can only learn that from real experience.

So why wouldn’t you apply the same logic in hiring yourself for your next business? You have to be honest with yourself no matter your amount of self-confidence. Second place is not also a winner in the real world – here’s why. If you are doing anything worth doing you can’t do it by yourself. You will need partners, investors, customers and they will all judge you. You will have opportunity costs and major expenses. You will be up against people that are smarter and more experienced than you.

“Failing small” just makes sense. You work on bigger and bigger ideas and put that experience in your back pocket. With every new venture the next one becomes easier and faster. Most importantly, your visual skills improve. You learn what to look for and can react to business killers earlier. That lets you play faster, for higher stakes and with stiffer competition next time.

Ultimately the most pragmatic business advice is to never stop. Always look for the next thing, don’t get emotional and stuck. Always keep learning and dreaming up bigger next steps.

Now calculate your risks, measure your true experience and go get em!

Microsoft has been in battle for second in the digital media player (DMP) market for 3 years now with Apple having lapped the competition more than once. But is the race and the season drawing to a close on this one? (pardon the moto euphemism, after all we are in the middle of the F1 and MotoGP seasons.)

In the past Microsoft has been known to devour markets they set their sights on even when they were far from first-movers. If you think about it, it was quite a smart strategy. Let the little nimble, hungry, entrepreneurial innovators prove a market and it becomes viable. Then Microsoft puts in 10-100x the money and win by sheer force. Simple, right? And everyone knows that large organizations almost always cannot provide the motivation that keeps innovators wanting to stay put anyway.

Well the iPod market is something quite different. First of all Apple is not just some startup. Second of all they have obsessive execution. But most importantly, they connect the dots. This is where user-experience, usability and convergence (especially in a daily-use consumer device) come in to play. And being an information architect this is why I have such a strong opinion on the subject.

To say that Microsoft really entered the DMP market too late, would be quite an understatement. They spent years fumbling with various hardware partners and could not deliver a device that consumers could get obsessed about. They finally pushed out a device (brown Zune) only to deliver a slightly clumsier form-factor, similar feature-set, low-cost leader. Those attributes didn’t get anyone excited and wanting to dump their other shiny device they were already happy with. To add insult to injury, Microsoft didn’t even bother to integrate with their own software infrastructure. No syncing with Media Center or even the Windows Media Player. Who in their right mind thought that was ok???

Here is where I’ll digress to a personal story…

A few years ago I was at the National Association of Broadcasters show in Las Vegas and stopped by the Microsoft booth. In one corner they were showing off their broadcast programming software, in another they were showing off HD-DVD, in the third their IPTV cablebox software and the fourth was so inconsequential I don’t remember now. So I went to the HD-DVD corner and to get a demo. I ask the three marketeers there how and when this will allow me (an avid Media Center user) to be able to record HD shows to the discs? And were the recently announced cablecard tuners coming? They didn’t have any answers. I go to the IPTV corner and ask them how this will integrate with Media Center and burn recordings to HD-DVD. No answer. In fact the guy didn’t even know what they were doing on the other side of the booth. This is when I realized that Microsoft’s #1 problem (by far) was that they have no unified strategy. Instead they were a conglomerate of many different camps that sometimes even competed with each other.

Back to our timeline. Later came the 2nd generation Zune. And there were lot’s of improvements over the current at the time iPod. All looked great and some missteps were fixed. All but a small miscalculation. The iPhone/iPod touch was announced and put the Zune firmly 1+ years behind once more. Granted there were some conveniences that Apple still didn’t offer (and to this day doesn’t) like wireless-sync and FM radio. But obviously they were not compelling enough to make a difference.

That brings us to today. This week Microsoft announced the Zune HD that will go on-sale in September. It has a slightly updated UI. It has an OLED screen. It has HD output. It’s good bang for the (storage) buck. But it still doesn’t integrate with Microsoft’s other products even in the entertainment arena: Media Center, Xbox and Windows Media Player. The one advantage in user volume that they have they are not using. Plain dumb and wasteful.

At this point Microsoft can just throw in the towel. Not only will they not catch up on the DMP side but they’ve managed to give away the smart phone market (the profitable high-end one) and not even realize that it has become one and the same. For a long time technology convergence has been a magic concept. How can even the slickest single purpose media device compete with a dmp/phone/pocket computer all with a 99% satisfaction rating?

Sorry Microsoft, but until you make a Zune phone that leapfrogs the iPhone in shininess, you don’t stand a chance at leadership. And even then good luck competing with the 3rd party developer community which is not only committed to the iPhone but is now strong enough to chip away at the core windows app market.

And yes I’ve seen Microsoft’s talking points about them wanting to have a solid second position, but that is simply a cop-out.