Lessons from the Obama Campaign for the Software Business

Yesterday at the 15th Annual Stanford University Accel Symposium, I heard an energizing talk with Chris Hughes, Facebook, and Architect of Obama’s Digital Campaign Strategies, and Matthew Barzun, National Finance Team for Obama and Former Chief Strategy Officer, CNET Networks, Inc. on “Technology Priorities: Lessons from the Campaign”.

Three powerful lessons leapt from the stage that certainly any software company trying to do something different should understand. These apply to any company who cares about their customer community and focuses on growing a large business.

Scale and Focus

Traditional software counts on hunting down customers and finding those willing to pay the large price tag. Kind of like traditional political fund raising where fund raisers seek big-heeled donors for the $5,000/plate dinner.

The Obama campaign’s New School thinking concentrated on creating scale and community. Instead of only mining a list for the 1-in-5 donor with the big bucks, they started asking 25 people to go out and each find 25 more to pay $25 to show up at an event. The first time they tried this, they sold every ticket. So they tried it again, and next thing they knew: 1,800-person venue sold out.

Thinking how to scale from a smaller list of initial supporters (Obama challenge) was very different than thinking how to divide-and-conquer the large list of potential donors (Clinton early advantage). Matthew said it required concentrating on metrics that really matter – a mantra within the campaign, lowering the barriers to entry for donors and supporters, while having high expectations for the ultimate outcome. Aside from this concentration on large scale, they were relentlessly focused on immediate outcomes: they had to win Iowa; there was nothing after Iowa. Matthew represented this new thinking…


Farming vs. Hunting

The campaign compared their marketing strategy to Seth Goding’s Farming and Hunting analogy. The new school campaign focused on farming a community versus only game hunting (Yes, they did both: about half small donors; half large.). The idea was to spread word-of-mouth, build a bigger community using the existing base of early passionate supporters.

The trick was multiplying the base versus the traditional 1-in-5 division game of hunting. Build the community through networking. Get 25 supporters to rally another for a small entry fee. This is how Matthew illustrates some of the early results…

Once the Obama campaign got this farming working, the multiplier trumped any notion of relying on the traditional approach.

Values Matter

Communities thrive on trust and respect. If you are serious about building a community of supporters or customers, start with asking how to treat people. Here’s the Obama Campaign Code they handed out for the Iowa caucuses: three simple values:

Respect
Empower
Include

At one caucus the Clinton people showed up with 13 supporters, which on a Cold Day in Hell in Iowa is a good showing. The Obama supporters on the other side of the room numbered 68. But the Clinton group was below the 15 count needed to participate. The doors to the caucus closed at a specific time, meaning no more participants. The Clinton team was potentially without a quorum.

Then after the rules allowed, in walk two more Clinton supporters, giving Clinton a quorum. This was against the rules. What did the Obama supporters say? Let them in. Include them. They deserve to be here. The spirit in the room was immediately more inclusive.

Software companies (all companies frankly) would do well to start by treating their customers with respect, treating them well, and concentrating on inclusion. A couple values we think apply to software companies is treating customers equally and fairly regardless of their company’s size or the size of their orders, and opening up information about your company (pricing, licensing, source code, bugs) so you build trust.

Applying new school marketing thinking and concentrating on scale, inclusion, and low barriers made a whopping 100% difference to what Obama raised. What would it do for your business, Mister Software Man?

Buying Software in this Economy

In spite of the delayed affect this economy seems to be having on technology, investors have no doubt, hence the market reaction. What does this mean for customers? What should one do differently when buying software? Part of my focus here is on Enterprise 2.0 and Web 2.0 software, but the advice generally applies.

Here are 5 tips for those buying during a weak economy…

1. Be a Cheap Bastard

Regardless of the economy, I come to the table biased: Software is generally way too expensive. Now, any bias doesn’t matter. Customers, who have budgets, will have greater buying power.

This is a story that repeats itself: Eighteen months ago the CEO of a new search technology start-up demoed his product to me. When I asked how much he would charge, he responded, “As much as possible.” This is a behavior that is commonplace; it is rooted in hiring expensive sales people and meeting unrealistic investor expectations. Today, this fellow would not get funding. Today, his VC would tell him to lower his prices and try a new marketing strategy.

Ingrained behaviors in enterprise software companies don’t die easily, so look for software where the value is compelling. This software may be all your CFO supports in the next year.

2. Focus on Project Teams and Content

(This is where I piss off the social media and Web 2.0 crowd). In the Enterprise 2.0 software space, a lot is made of social networking. Andrew McAfee‘s definition of Enterprise 2.0 includes the word “social”. Yet when times get tough, the core work is all we’ll care about because we’ll have fewer people to do the work. The core work is not my social network, it is my project, and the content we build every day. By core, I mean: what I need 90% of the day that leads to a real outcome.

Ned Lerner of Sony Playstation said something interesting at Enterprise 2.0 in Boston last June, he said, “We don’t worry about getting the next person motivated to join the large corporate social network, we worry about great tools for our project teams.” He focuses on how to make his projects productive.

When the chips are down and budgets are low, this type of practical thinking will dominate, because all CIOs and CFOs will care about is whether or not a tool really increases productivity, and helps the next high priority project.

It’s not that the social aspects of this new software are useless. Quite the contrary. It’s that the Doubting Eyes of Skeptics in your company will glaze over if you trumpet the personal pages and social connections in this wonderful new software. Your ability to search on who uses certain tags won’t get people jumping up and down.

As an example, you instead should be demonstrating how project teams can produce documentation for customers on the web site without any expensive software, and (if you like) customers will be able comment on it, or (if you like) edit and improve it. The difference is the focus on content.

3. Focus on Killer Apps – Obviously Useful Tools.

Email and Word processing are considered killer apps because their benefit is obvious and they spread rapidly. Obviously Useful Tools don’t need a Return on Investment (ROI) analysis. They don’t need a seminar on adoption. A $100K piece of traditional enterprise software rarely is a killer app because adoption invariably requires considerable work: convincing users, training, roll-out projects, and the Famous Dreaded ROI Study.

Blogs have been so popular, they are a killer app. I would classify blogging as a Tier Two Killer App simply because they are nowhere near as pervasive as say, office apps. Nonetheless, blogging has proved an extremely useful communication vehicle.

Wikis also earn this distinction. Thousands of people in companies are now using wikis, without training courses, management edicts, and ROI studies. The value wikis play in communities, collaboration, and knowledge capture is clear.

A practical test: ask how concrete or vague is the description of the software. I still don’t know what a Collaboration Platform really is, let alone a Scalable Enterprise one. If a vendor concentrates on the concrete usefulness at a tool level, then you have a) a better chance of understanding it, and b) eliminated a blizzard of marketing bullshit.

If one takes as a given that securing a new budget for a large software purchase will be hard for many CFOs to swallow in this economy, then concentrating on inexpensive, highly useful tools is the way to go.

4. Ask the Vendor a lot of Hard Questions

Although Oracle’s financial strength won’t be doubted, half or more of Silicon Valley should be. VCs take enormous risks, but is your CFO interested in this type of risk right now?

I am not advocating shutting out small companies. Instead, if you focus on truly useful tools (Tip #3) and you are a Cheap Bastard (Tip #1), then you are most of the way home here. How much can you lose on a $1,000 or 3,000 system?

Still, ask hard questions about the company’s performance and about their approach to doing business. How transparent are they? Transparency removes doubt about with whom you’re dealing. The honest, open small vendor with a useful, inexpensive tool might serve you better than the (seemingly) safe, expensive, traditional, Cloaked-in-Confidential-Price-Lists traditional vendor.

5. Did I say: Be a Cheap Bastard?

Oh yeah, in case I forgot. Now’s a good time to be a World-Class Tightwad. I spend time regularly in Sydney and Amsterdam, homes of the Dutch and Australians, both world renowned for seeking value (I am being polite). Right now, make a practical Dutchman your role model when you belly up to the Software Bar. Cheers.

LinkedIn: New School vs. Old School Networking

Talking about adoption issues with new social tools eventually touches on age differences. Are younger people more inclined to use Web 2.0 technology? Are managers less inclined? Whether you believe so or not, do we encourage this problem? It’s one thing when traditional industries struggle with this, and it’s another thing when technology or internet companies perpetuate this hurdle to 2.0 networking possibilities.

With business people now using Facebook for networking, I was struck by noticing on Susan Scrupski’s Facebook profile that she is a member of a network called “Dump LinkedIn and other networks in favour of Facebook”. Is LinkedIn old school networking? Some people must think so.

LinkedIn runs the risk of alienating an exploding market of 2.0 advocates if it doesn’t address this type of challenge. I am not surprised LinkedIn is allowing this to happen.

Sharing a panel with a LinkedIn exec, I asked him if LinkedIn had ever considered creating a collaboration space on a wiki platform such as what SAP does with its SAP Developer Network. Perhaps LinkedIn could offer a more exciting collaboration space to complement its network. LinkedIn’s question-answer feature is rather old school. Now I can be accused of promoting wikis, but his response said a lot about LinkedIn’s view of the 2.0 world. He said LinkedIn targets senior professionals and senior people are too busy to edit wiki pages and that senior people have little time to write, let alone handle email.

LinkedIn I will assume is commercially minded and has concrete business reasons for taking this tack. But why perpetuate this hurdle when you have such a huge valuable network? Whether it’s a wiki or not, I would like to see LinkedIn get more new school-minded and make the experience on their site a lot more interesting.

Twitter 2.0

Twitter 1.0 is your first experience with The Illness. The Affliction. Twitter 1.0 can be disappointing. As CNET’s Elinor Mills complained and old friend Bob Page points out, knowing someone is eating a cookie or having problems with bodily functions does not exactly enlighten one’s life. Twitter 1.0 fails for many because they listen to the wrong people, or they may not have the proper Digital DNA to find a positive outcome with the medium. Ed Yourdon, who I remember from my structured programming days (OK, this was after punched cards), has referenced both generational and existential issues with social software:

Talking … with a group of very savvy, up-to-date colleagues who … felt very strongly that blogging is a largely narcissistic, unproductive, self-centered activity, and one that presents significant risks to companies. I’m beginning to think that all of this is somewhat of an existential thing: if you don’t blog on a fairly regular basis, you can’t imagine why anyone else would do so; and if you’re predisposed to think that blogging is just narcissistic chattering, then you’re not likely to spend very much time (if any at all) reading anyone else’s blog either. It may also be a generational thing: middle-aged and older people are less likely to read or write blogs, and younger people (and those who still feel young) are more likely to do so. This is not necessarily a good thing or a bad thing, but it may be one more thing that separates the generations these days.

Ed is talking about blogging but it’s the same: are you social software inclined?

Twitter 2.0 requires a little existentialism. Jean-Paul Sartre may have made a fine Twitterer. Twitter 2.0 is when you get past the initial traps. Twitter 2.0 is when you start finding value.

What value have I found? For openers, the return is modest. Don’t expect the value you get from a wiki or IM or an insightful blog. The trick is the investment is very low. The ROI is good as Jeff Clavier has told me. I don’t spend much time on Twitter: quick scan, anything interesting, and exit. Because I am ADD and nowhere near as focused as James Governor or Robert Scoble, I don’t tweet much. As least yet.

Here’s the value I have found so far:

• I find out what my network is thinking in a more organic way than through Techmeme which is expansive although useful.
• I learn news important to my business. A customer alerted me to their purchase of the clustered version of Confluence on Twitter.
• I find events. This weekend Brian Solis had a BBQ near my house, and I ran into some 2.0 colleagues. Last week, I connected with Susan Scrupski on an Enterprise 2.0 event. Both thanks to Twitter.
• Twitter allows staying in touch with folks where you don’t want the more intense engagement and commitment of email or phone.

… and on a more basic level…

• I sold two of my band T-shirts — raising money for a cancer charity — to people I have never even met, Ric Hayman in Australia, and Thomas Otter in Germany. That was very cool. Twitter and this blog made it happen.
• Stephen Wright: perhaps the Single Greatest Thing about Twitter is getting this comedian’s hilarious tweets like, “If God took acid, would he see people?” Now if only Eddie Izzard Twiitered, my life would be complete.

Twitter 3.0 will be about refinement. So far I am accumulating people, but perhaps I’ll need to prune the Cookie Eaters, and get picky. Right now my criteria is lax. Twitter 3.0 may also be about Facebook. There’s a new link to get you on Facebook, and I signed up. Aside from my kids harassing me endlessly for being on Facebook, I have joined Stewart Mader and the Social Media Today on Facebook and will see if this is a useful extension to Wikipatterns. For now 2.0 is working.

Twitter Twatter

Okay, I give up. There’s a twitter wiki. Including 13 mashups, 33 scripts and libraries, 4 browser plugins, 5 mobile apps, 10 Mac apps, 10 Windows apps, and Oh… forget it. Some of the spine-tingling highlights:

• Sounds like something I want in my band… Twapper: WAP browser for Twitter so you can keep up with Twitter on your mobile without the barrage of SMS interruptions. Something I perhaps (?) should worry about.
• Try saying this fast 3 times… Twit Twoo: plugin that allows you to update your Twitter status right from your WordPress blog. Well, I like WordPress.
• The deftly named… Spaz: multiplatform Twitter client for Windows, Linux and OS X
• And for those with too much time on their hands… MyChores: keep track of your household chores and send automatic Twitter posts whenever you complete a task. Why? Please…

A Twitter in Training

I’m not sure I get it. This Twitter Thing. I’m trying because the sheer weirdness of it demands some attention. I have Twitter Searched, Twitter Vision-ed, and Twitterriffic-(k?)ed. I am a Tweeter in Training I am afraid. This much is clear:

There is no end to social networking. If you tried to explain Twitter to most people in the world, they would think you were daft. Yet it is incredible to look at Twitter Vision and watch the tweets popping up all over the world real-time (there is some latency I discovered if you want to watch your own Tweet). What has come to us? Are we just desperate for another form of communication?

Twitter is a feature set in Social Software Land. It’s really a feature, but Twitter Search and Twitter Vision give it dimension, I guess. If I ever saw something that Google or News Corp. will acquire, boy, does this smell like it. Advertising is the logical next move, but someone else will be much better positioned to monetize this insanity.

Twitter is an interesting way to watch the Silicon Valley Bloggers talk to each other. Scoble, Arrington, Winer, and crew tweet away. Of course I could just wait and read the blog. But the color commentary is amazing. No surprise, but Scoble’s tweets can be interesting. Arrington is more of a self promoter, but hey, I don’t blame him.

Although I have succumbed to listening for Tweets, I don’t really get it yet. So far I see limited value:

• You might cross paths with someone. I almost ran into Stowe Boyd when we were both in Palo Alto. Schedules did not allow but Twitter made it possible.
• You can stay in touch with people who rarely see without any real commitment. It’s passive. I listen to probably the best tech industry analyst, James Governor of Red Monk, who also bought me a Guinness once and is a great guy, but Way the Hell away in London.
• If you want to ask a bunch of people for advice, it’s one way. Scoble told me he likes it for that. He of course has around 2,100 followers so someone has dismantled a nuclear bomb or built a TwitBox. Yes, there is a TwitBox but nevermind… We are into self-fulfilling prophecies here in Silicon Valley.

Other than that, I still don’t get it. I remain faithfully a Twitter in Training.

Yelp: What is Hip?

This year I plan on writing about interesting social software and social networking, and Yelp is my first target.

I really like it. It comes down to two things: a well-designed review site is a great idea, and Yelp is very nicely laid out. It proves once again that being first or biggest in a category does not necessarily mean you can’t have your ass whipped by a better idea. Not that Yelp has whipped anyone’s behind yet. But if I were Citysearch, I would pay attention. (Disclosure: a close friend recently became Yelp’s VP Marketing).

Yelp’s thoughtfulness in the web experience becomes evident if you spend time on Tripadvisor or Citysearch. I am a Tripadvisor user, I really want them to succeed, but the mix of advertising, search, and content is poor. The valuable content on Tripadvisor shows communities will form around reviews, yet Tripadvisor’s execution is flawed. Citysearch has become a de facto yellow pages, but the reviews have lost any meaning. More important, Citysearch has no character that might truly engage a visitor.

Yelp, however, is employing some social networking tricks starting with your own url, friends, various types of ‘pokes’ (That’s a Facebook term) or ways to touch others, and even creating personal lists like “Wineries” (OK I live in California) or “Cheap Restaurants” or about anything you like. In fact, it can get rather nutty when someone reviews “Boyfriends”. And that edge to Yelp is the beauty of it. Yelp certainly has some grip on what is hip.

There are things I don’t like. Primarily it’s annoying viral marketing tactics. When you join, you are urged to invite a bunch of friends. While social networks are about connections, I may not want this right away, and I may find this intrusive. I also dislike being asked every time I do a review who I want to send it to. These features should be available and off to the side.

Yelp is so well laid out I could even see us at Atlassian learning from what they have done on the personal page in creating an eye-catching template for a personal wiki page on our Confluence enterprise wiki. That may get some of our killer engineering team excited, but looks matter. Even in enterprise software.

What does Yelp need to worry about? #1 How to make money without pissing off the community? I am not privvy to their numbers, but it fairly safe to say they have a road ahead of them. There’s the You-Tube-It-Doesn’t-Matter business model, but that’s risky particularly the longer this bubble lasts. #2 Not becoming a pile of doo-doo reviews where everything adds up to 4 stars in a happy eBay-review kind of way. But Yelp has a ‘social networking’ pony in the barn to address this. What if I could filter to just my friends’ or respected favorites’ reviews? Then things could get very cool.

Jobster: Good Idea?

Is recruiting ripe for something new or better? You might think so. Craigslist was the last really useful and different way.

So you might think Social-Networking-Meets-Recruiting is timely. Linkedin, the most prevalent business network has added jobs to make money, but what every job board learns is: you are only as good as your volume. So far Linkedin has been disappointing. But we’ll keep trying because we like the concept and it’s inexpensive.

Jobster, on the other hand, started as a recruiting-networking concept, right off the bat. Nice idea but bad business model. Why do businesses continue to make it hard for customers to check out their services and buy? Jobster fails for three glaring reasons:

1. Make it easy to learn about the product. Go to jobster.com and two clicks later an employer like me is reading the Jobster Solution. But what exactly does it do? It still seems unclear so I guess I better click on demo. There’s an option to enter my contact info. No thanks. Click on Tour. In the first 30 seconds I learn that Jobster is a whole new way of recruiting, that I can proactively recruit non-job seekers, that scads of recruiters have helped design it, and that the CEO is willing to roll up his sleeves to work with me. I feel great. That’s really sweet of him. But I’m a typical employer: I’m in a hurry, I need people yesterday, and how do I get started? How do I cut through this marketing crap?

2. Make it easy to sign up. Clicking on “Get started” is where things go South fast. I have to fill out a form, and submit an email. And give them my phone number. That sucks but hey, they’ll send me a password and I’ll get started, right? Think again. I get an email saying “The future of hiring technology has arrived and Jobster is leading the way. If you have questions or would like a demonstration contact us at…” Grrrrr. Where is my password?! Let me at this thing! I want to try on the flared pants, and if they fit, hey, I’m buying. But I have to call them and speak to a sales person! Here comes Telesales Death. Direct sales means high prices. But I’m dying to check out “the future of hiring technology”…

3. Give people a free or cheap way to evaluate, if it needs any explaining. Simple products are simple to test out. But things like software and this “new way” of recruiting are tricky. Guess what Jobster costs? $295 per month. But that’s deceiving because Gary Thede, the helpful sales rep at Jobster tells me it takes at least 90 days to see any result. Even then, he agrees when I say this is a $4,000 decision because signing up for a year is what it takes to build your network. Just look at how long Linkedin is taking to gain steam. And that is if Jobster even succeeds. Which is yet to be proved.

Which takes me back to the web fact: you are only as good as your volume. The other fact in recruiting is: Craigslist charges $75 and is the most effective job board. If you have a “new way” and a great idea, which Jobster just might have, then you better face economic realities: teach me online quickly simply, make the barrier to signing up low, and let me try it out for free or for peanuts. Make it fly off the shelves. When I see the deal, make me go “Wow”. Unfortunately Jobster is the opposite: hard to understand, hard to sign up for, way too expensive, and laden with an expensive sales force. I wish Jobster well though because it’s a good idea.