Blog Posts About: business

If you haven't heard about Markus Frind and his dating site at plentyoffish.com, you will.

Markus is singlehandedly disrupting the dating site industry by offering a free alternative to pay-to-play sites like match.com. What makes his story so interesting is that he is the site's only employee - he runs the whole site from his Vancouver, Canada apartment and makes millions of dollars from Google ad revenue.

Here are some of the basic facts from a recent Wall Street Journal story (via: online personal watch):

• For the week ended April 28, PlentyOfFish.com was the 96th-busiest Web site in the U.S. (HitWise)
• Busy Web sites like these usually require scores of people. Mr. Frind says people often don't believe him when he says PlentyOfFish is all his.
• Nielsen/NetRatings says that by some measures, such as the time its members spend on the site, it ranks second after eHarmony.
• A few months back, he posted on his blog a picture of a check from Google for nearly $1 million for a two-month period. Google confirmed the check was for real.
• Mr. Frind says the site brings in between $5 million and $10 million a year.
• Many companies would respond to competitive pressure by hiring someone. Mr. Frind says he has no plans to do so.

There are two things that I love about this story:

1. Disruption: Markus is constantly talking about the demise of the paid sites and has the model to prove that he's a real threat to the top players. I have nothing against the paid sites, or their model, but it's great to see one guy be able to create something so threatening to an established industry. His blog is here.

2. Small is beautiful. Consider this: In 2005, Match.com had 275 employees and Alexa (whose permalinking and graph sharing tool is very broken - booo!) says Plenty of Fish is gaining on them in a big way - with only one employee and no venture funding.

This idea of being small, lightweight and happy really appeals to me in a fundamental way. It reminds me of the Robot Co-op who run very large sites (like 43 Things) with a small team of 6. The same is true with 37 Signals who have chosen to stay small despite the to opportunity to grow in #s of employees and of course, Craigslist.

These days, 20+ employees and millions of capital can be more of an impediment than an advantage - especially if you count the happiness factor. I count Markus as one the few who are showing us the business models of the future.

I'm originally from North Carolina and I once learned that our state motto is "Esse Quam Videri" which translates to "To Be Rather Than To Seem"

If you ask me, this should be the motto for businesses (and individuals) who are trying to adapt to the new world of community, marketing and advertising on the web. The days of "seeming" are over and success in the future is all about "being". Really, there is no choice - the customer now decides what is real.

To Be Rather Than To Seem - it makes sense to me.

The Clue Unit podcast is a (mostly) weekly discussion of news and trends related to online communities in the business context with Jake McKee, Lee LeFever and Christopher Carfi.

(click here to listen - MP3)

(click here to subscribe to this feed)

Episode 14, about 30 minutes.

Today's Topic: Non-traditional Discussion of Transparency

•     Spammer Contacts Jake  
•     Flickr Censors User  
•     Engadget Drops Apple's Stock Price  
•     Heather and Derek Leave JPG Magazine

As always, the full notes and all episodes are on the Clue Unit web site.

Wow, interesting things from community people are just rolling off the presses lately. Derek Powazek is leaving JPG Magazine and 8020 Publishing (the companies he founded) - due to a disagreement with the partners. It's so sad to see someone work so hard and be so passionate about a community project only to see it controlled by someone else. His passion made it successful, just like Matt Haughey at MetaFilter.

JPG Magazine is one of the community-based businesses that I cite most. It's a real-world photography magazine that is made of contributions from the community. The community creates the photos and votes for them to appear in the magazine. A well crafted community mobilization strategy if there ever was one.

Derek's explanation of the situation is a case study in how partnerships can go wrong - and serves as his way of saying goodbye to the community he developed over three years. If you're an entrepenuer, go read it now.

If it’s any help to other entrepreneurs, here’s what I’ve learned.

1. Make no assumptions when it comes to roles and responsibilities. Like my dad says: “Someone’s gotta call quittin’ time.�?
2. Communication between partners is mandatory. And you cannot communicate with someone who is not communicating with you.
3. Decisions aren’t decisions if you have to keep making them. Set on the course and stick to it. If you keep talking about things that have already been decided, nothing will ever get done.
4. When someone says one thing, but acts in a contradictory way, you have a choice between believing their words or believing their deeds. Believe their deeds.
5. Never let anyone tell you what you want. When someone says, “You don’t want that,�? what they really mean is, “I don’t want you to have that.�?
6. Don’t stay where you’re not wanted, respected, or happy. Even if it’s your company.

Derek is a long-time community professional - he wrote a book called Design for Community in 2001 and has been a champion in the community world for longer than that. His wife, Heather Champ is the community manager at Flickr and collaborator on JPG too. I wish them both the best as I'm sure this is not the best of their days. I'm sure they will be on to greener pasture soon enough.

Darren Barefoot pointed me to a great example of how companies should not respond to criticism in blog comments. He wrote a critical post on the email newsletter company Constant Contact and his readers pointed him to competitors in comments. Then, nearly 1 year later, this entry received 3 comments within 10 minutes, all from "people" touting their positive experiences with Constant Contact. Here's an example:

The thing is, their comments were traceable back to the company (as Darren's red arrows above illustrate). There is a clever person, sitting at a desk at Constant Contact headquarters, adding multiple fake comments to entries like Darren's.

Darren explains...

Marketing lessons? Well, they should be obvious:

• Never lie. You’re going to get caught. Constant Contact should have just left a comment explaining the advantages of their service over the competition, plans for new features, and so forth.
• Join the conversation, don’t try to spin it.
• If you’re going to lie (and you surely shouldn’t), don’t be stupid about it. Understand how the Web works, and that if you comment from your desk at Constant Contact headquarters, that you may be traceable. And I’m no l33t hax0r–the evidence is right there in my notification email from WordPress.

This reminds me of Visible Technologies, that I wrote about here . They have touted their "thousands of personas registered with online forums" that can be used to balance negative/critical discussions. Maybe Constant Contact should have teamed up with them so that their lying would not have been as traceable. A match made in heaven .

My message: When it comes to dealing with your customer "community" in a responsible and productive way, there are no shortcuts. If you try to take the easy route, you are taking a big risk because you may end up creating more negative feelings and press that you ever imagined. Be real, be honest, be a person.

Case in point, this entry. I am telling my small part of the online world that Constant Contact appears to be making pathetic and dishonest attempts to balance criticism - and proving that Darren may have made the best decision in choosing a competitor, in his case, Campaign Monitor.

Aside: I think Constant Contact's tactic is called "astroturfing", derived from the brand of artificial grass used on sports fields. Artificial grass - articificial grassroots campaigns - I think you get it. More on Wikipedia.

I have a hunch that the world of online community ROI is shifting. More data is available to support decisions and most importantly, it appears that businesses are placing less emphasis on ROI as a requirement for community projects.

Last week I had to miss what appears to have been a great event called the Online Community Business Forum. I've attended Forum One's Online Community Summits for years and always considered it time well spent.

A couple of friends, Joe Cothrel and Bill Johnston presented some data about our strange and wily friend - Online Community Return on Investment.

From the Online Community Report Summary of the Event ...

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Publicly available stats (compiled by Joe)

• Community users remain customers 50% longer than non-community users. (AT&T, 2002)
• 43% of support forums visits are in lieu of opening up a support case. (Cisco, 2004).
• Community users spend 54% more than non-community users (EBay, 2006)
• In customer support, live interaction costs 87% more per transaction on average than forums and other web self-service options. (ASP, 2002)
• Cost per interaction in customers support averages $12 via the contact center versus $0.25 via self-service options. (Forrester, 2006)
• Community users visit nine times more often than non-community users (McKInsey, 2000).
• Community users have four times as many page views as non-community users (McKInsey, 2000).
• 56% percent of online community members log in once a day or more (Annenberg, 2007)
• Customers report good experiences in forums more than twice as often as they do via calls or mail. (Jupiter, 2006)

From the April 2007 ROI Survey:

• Only 22% of respondents had clear ROI Model
• 42% had staff of 1-5 people
• 49% Report Monthly to Mgmt
• Establishing ROI Model was a priority for most respondents in the near term

Full powerpoint deck here.

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Mukund Mohan also did a recent survey of developer communities with 112 respondants. One of the highlights regarding ROI was:

¾ (75%) don’t provide ROI information for their developer communities and don’t see the need from management to do so. One participant put it “Its so obvious what the ROI is that we don’t see the need to justify it�?.

Link to the summary file with charts and results.

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Dave Hersch of community platform company Jive Software shared his views recently in a blog posted titled "ROI ShmoROI"

I've been getting a number of reporters asking about the ROI behind an application like Clearspace lately. My general response is that it's a fool's exercise. Trying to determine if the savings and revenue increase are worth the expense is like trying to measure whether the view from atop Everest was worth the climb -- it's exceedingly hard to measure and it should be painfully obvious.

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Here's my perspective...

For me, ROI is important, but I think the equation should be flipped. One of my core beliefs is that, in the future, businesses will rely on their communities of customers to remain competitive.

In this context - what is the cost of not pursuing a community strategy? What will happen, over time, if community doesn't become a part of the organization?

The threat I see is the inability to remain competitive. If your organization doesn't treat their customers like a community and build those interactions into value, your competitors will. Your lack of a community strategy *now* may become a competitive liability in the future. You may be faced with competitors who save support cost, innovate more quickly and produce higher quality products because of their engagement and relationships with their customer communities.

In this way, the question becomes: what is the future cost of not pursuing a community strategy now?