z on life

I have mad respect for the Xobni guys. I think they have more courage than almost every other YC company combined. Though I don’t know anything about the cap table, I would guess Matt and Adam could have walked away with something like $5MM each. And hey, is a year or two at Microsoft that bad? These guys took an outcome that many other YC companies would die for and told MS to stick it. Walking away now means a lot, and these guys are definitely ballsy.

So what’s next for Xobni? It feels like there are three main issues to address. First, they need to get out from a position where the only logical buyer is Microsoft. Second, they need to grow the business either by generating revenue, or by becoming far more strategic in both the depth of their product and breadth of their domain. Third, since they have asserted their defiance, do they create an IPO roadmap?

So what would I do if I were running Xobni?

1. Support a whole range of email clients and become the de facto email analytics plug-in across the board. By doing so, Xobni will escape the Microsoft-only trap and will increase their pool of potential users. They have already started doing this with Pine (yes, joke acknowledged) and I am sure others are to come. So, this one is no surprise.

2. Produce an email client themselves when their value proposition gets good enough. As a middle ground, you could simply have Xobni synchronize all of your mail with its own Xobni webmail service (for sure in certain setups, a little technical magic might be needed, but its doable). In this way, anyone with Xobni installed could start to use a Xobni webmail service as a standalone client with all of their messages, contacts, and the like pre-populated. Because they can control the messages, there are lots of powerful things they can do with viral user acquisition strategies a la Hotmail (or even pull some strategies from the Facebook app community since Xobni is a slightly social being). If they get in the door with a plug-in, wean people off with a webmail or local client that has all their existing information pre-populated, and spread like wildfire with some finely tuned viral processes, they could do some serious damage.

3. Don’t build a social network, just make email fun to use and make it easy for people to see what their email graph looks like. While Bill Gates said Xobni is the next-generation of social network, I think this is hardly the place to take that literally and incorporate pictures, walls, and pokes. The communication stack is a hard thing to challenge, and because people have pre-existing and quite different notions of how they use email and social networks, it will be quite the uphill battle to merge those together. People need to feel that each thing they use has identity, and when you blur the lines too much, they get confused or turned off. I would stick to making a fun and useful layer of tools that leverage the social graph instead of becoming the medium on which the graph is built. People love rankings, quantifying friendships, and colorful behavior graphs enough as is. The temptation to be the next Facebook is one to ignore.

4. Become the all-in-one contact threshold tool, and by that I mean users should be able to see their activity across all aspects of communication and set personal alerts for when their interaction level with somebody drops below or goes above a certain level. Efficient networking in the business (and sometimes social) world means knowing exactly how much time to spend with each different person. This sounds cold and impersonal, but if your network is large and sheer efficiency is your game, then it is crucial to have your thresholds just right. If Xobni monitors the whole spectrum of communication, they are in a unique position to do just that. Imagine a day when in Xobni you can set person A to a level 1 contact, person B to a 3, etc and then give weights to different communication types to ensure the level of interaction you are engaging in with someone is not too much or too little given how important they are to you. This is the next level of streamlining your life.

5. Sell employee analytics to HR departments via the huge amount of mailbox data that they can parse and interpret. What if Xobni did some natural language processing on the tone of intra-company emails to sense employee happiness? What if they could sense conflict within an organization before things got serious? What if they could see the exact structure of communication within the company from an organizational behavior perspective to see who really talks to whom, how often, and how decisions are really made? This reminds me in a way of services like those from Success Factors, a company that recently IPOed and now has a market cap of around $500MM. Businesses will pay through the nose to understand their employees and keep things going as a well-oiled-machine. Xobni could be the oil-filter of big business.

6. Attack other verticals on the local machine like the media player, the instant messenger, the file system, the browser, etc. Xobni as a company is clearly good with data, and there’s ways to enhance all of these areas with some kind of data play. I can think of a few right off the top of my head. It’s clear that these guys have the DNA to think of data-driven enhancements, so I am sure they would be able to crack at least a few more verticals on the local machine. If they can unify this data in the right way, they could do anything from building the cross-domain uber-recommendation engine to selling the most detailed, parsed, and dissected consumer data to analytics companies and others. This sounds like ‘Big Brother’, but as long as Xobni adds enough value to those who install, users simply will not care.

X. I wanted to throw a fun one in the mix just for kicks, and that is to implement premium email delivery. Imagine anyone with Xobni could set a price for which they would have any email auto-bubble to the top of their inbox. You as the sender who also has Xobni could certify an email as premium and actually pay money (revenue shared between Xobni and the receiver) to get that email at the top of the receiver’s inbox. You essentially create an open market for everyone’s prime inbox space. How much would you pay to guarantee a super-important business email gets read ASAP? Could sending a premium email be the new ‘virtual box of chocolates’? Would you pay $100 to get your email at the top of Barack Obama, Perez Hilton, or Tiger Woods’s inbox? Sounds like a joke, but maybe just maybe there is a business in there.

So what would you do if you were running Xobni? Would you have taken the money to begin with? If so, why, and why not go big? If not, what would be your strategy now? I would love to hear some thoughts in comments or email.

Great thought experiment: how would you sell water*? This is much like one of the stereotypical Microsoft interview questions of “how would you sell ice to an eskimo?” and is a cool exercise to go through just for fun.

Here’s how I would do it. Put the water in an interesting bottle. This bottle has 5 different openings from which to drink. Maybe one on the top, one on the bottom, and three on the sides at different angles. At this point, ergonomists, environmentalists, and production managers alike are probably freaking out at how user-unfriendly, plastic-heavy, and expensive this product would be, but just bare with me.

Now, let’s include a marketing spin on the consumption of the water. Not only is this a ‘premium’, ‘hot’, and ‘blinged out’ product, but we will push the idea that the opening you drink out of ’says something about you’. For instance, those who drink from the top are traditional, those who drink from the bottom are rebellious, and those who drink from each of the side openings are wild, cool, and bad-ass respectively.

What’s the goal of this? It’s to get people to self-identify with one of the methods. If you can successfully pull it off, you’ll have created an interesting dynamic between the product users where they argue over the best way to drink. Soon you’ll have trash-talk dialogues going about how “top-drinkers are un-cool” or “left-side-drinkers are the $&!^”. This is exactly what you want. Not only do you have to put thought into which way you drink as an image statement, the choice of buying another brand of water will become a huge social detriment. If you buy a different brand, you lose the ability to express yourself. You become a generic person. Yuck! Who wants to be generic? No one does. And that’s the beauty of it.

Take this a step further. Let’s get 50-cent to have the water in his video. Maybe he can even throw in a line like “The realest playaz drink from the right. Damn this water is tight.” Next thing you know, hardcore 50 followers everywhere are buying up bottles like crazy, eager to show off their loyalty and get some street cred. Things only get better when Kanye raps about “I only drink from the top, cause it gets me goin and I just can’t stop”. Kanye fans rush to grab some bottles and drink from the top to show how he’s the man and Fifty is uncool. Now you’re golden**. Everyone who chimes into the debate further boosts the sales numbers. The more controversy you can raise, the stronger the dedication will be, the more water will move off of the shelves.

Now in all reality, pulling something like this off is far-fetched. There’s a number of serious problems with this strategy above and beyond the less-than-serious issue that Fifty was an equity holder in Vitamin Water and thus has a conflict of interest. Joking aside, we see similar things in the consumer world every day. It’s like wearing the Yankees hat with a perfectly flat brim and the sticker still on. Surely it’s not more comfortable, and it’s not as if the sticker has utility value. It’s really an image thing. How about paying 5 times more for something because it has Gucci tags? At the end of the day it just makes the wearer ‘feel’ good. How about shooting out T-shirts into the crowd at a baseball game? You don’t pay for an expensive ticket to catch t-shirts, you pay to watch baseball, but fans love the t-shirt toss and often remember it more than the game nonetheless. How many people wear Tag Heuer because Tiger Woods does? How many people bought a LiveStrong bracelet, not for charity, but because it was the ‘cool’ thing to do?

The learning lesson here is that you shouldn’t always just think about the actual product you’re working with as the thing you’re selling. You could be better of selling an image, a feeling, a status symbol, supplementary activities, or personal meaning. If you can surround the most boring of products, ie: water, with a really super-cool context and get people riled up about it, then almost any other product should give you way more leeway. Instead of getting caught up on the idea of creating the perfect product, settle for an okay one. Instead think about all the little things you can do to get people feeling excited to use your product, either directly or indirectly. Sometimes its the subtle mini-emotions evoked by products that make the difference, not the shear utilitarian value. The more you can get people to use your product because of what it means or how it makes them feel and not because of what it is, the better. If you get to this point, you’ve created personal value for the user, and you have created an arbitrage. Personal value is free to you as the product creator, but worth lots to the customer. And when you’ve made some, it’s like you have a license to print money because what makes you money costs you none.

So, how would you sell a teenage girl MySpace? Would you talk about social networking features and news updates and friend lists? No, of course not. This is like selling water “because it hydrates you”. The magic isn’t in the utility, it’s in the soft experience. The sell for MySpace is in the ‘wow’ moment when she is done customizing her profile with glitter, blinking text, a custom sunrise background, 4 YouTube embeds, 3 celebrity photos, a blog post, a music player bumping, and an ‘about me’ where she answers 100 personal questions. The sell is when she takes a step back and says, “yes, that’s me, and I love it!”. Again, it’s not about utility. It’s about what it means.

How would you sell water? How do you plan to sell your web 2.0 idea to users? If it’s just great features or great technology, you’re probably still leaving something on the table.

* - Credit for this great hypothetical goes to Andrew Chen.

** - If you’re not familiar, Kanye and Fifty have had a bitter on-going rap battle for a long time and fans of each side usually take vary strong stances and are never hesitant to show support.

In consumer web, how can you avoid the constant urges to build for yourself? One great way is to run through the thought experiment of building a product for someone as little like you as possible. Invade the unknown territory that is urban America, the economically challenged family, a youth age group, the opposite gender, or better yet, all of these at once.

So how would this go if I were doing it? I would describe myself as the following:

• 20 year old white male
• Socio-economically upper-middle class suburban upbringing
• Well-educated at the masters level from a top university
• Technology enthusiast, sports fan, avid reader
• Facebook versus MySpace? — Facebook

Knowing that, then, who would it be fun to build for?

• An urban demographic with low socio-economic standing
• Teenage girls who hate school
• Someone who thinks MySpace and YouTube are the entire Internet
• Anyone who didn’t go to college

Let’s say your building for any or all of these characteristics. How do you do it?

To approach this very hard problem, you need to be systematic. If you can’t immerse yourself in the culture, then you should at least talk to some people who are in it day-to-day. Listen to them talk about daily life. If you abstract away the unimportant details, it is likely that you are very much alike in the raw elements of life that provide happiness. The key is to find the analogies between your experience and their reality so you can come to terms with why they like the things they do. Pull out these analogies, understand the core elements of life that provide happiness, and surround them with a context that is agreeable to whoever you’re building for.

So let’s say I am building for an urban teen girl who has no plans to go to college, works at a fast food restaurant, and is a huge MySpace party girl. First of all, if you think most of America is far, far different than this, you’re way off base. To be mass market, this is precisely who you need to build for. So the question is, what should be built for this huge and actually very average audience? To start, consider what they might like: YouTube, party pictures, stating their BFFs, rap music, glitter text, flashy MySpace layouts, hot celebrity photos, scandalous personal photos, flirting online, phone wallpapers, pimped-out text with misspellings, music videos, Apple Bottom jeans, and so much more.

So right now you might be tempted to make a mash-up to ‘best’ hit this demographic, something like an embeddable photo slideshow player with background rap music sequences for MySpace that features a glittered border and pimped out subtitles that let’s users post shout-outs to each other. This is exactly how to get a horrible and contrived product that will fail miserably. Instead, try to understand what these ‘things they like’ are really telling you about the psychology that drives them.

YouTube and the music videos (and a lack of things like news articles) tell you that they like visual media way more than text-based media and will want a product that provides instant gratification in a rich way with little effort. The Apple Bottom jeans, and rap music are things that indicate a need to self-identify with a unique culture and specific icons, symbols, brands, and activities. The phone wallpaper, pimped text, flashy layouts, and glitter text represent self-expression and the ability to show uniqueness, creativity, and present themselves in an eye-catching way so they’re differentiated to those around them. The party photos are displays of social proof of popularity. The flirting and scandalous personal photos are all mechanisms of reaching out to sexuality and demonstrating personal value and power in a social way. Hot celebrity pictures are icons of future aspiration. Finally, prominently displaying BFFs shows a need for attention and the reciprocation of affection and relationship.

When you boil these things down you get the raw elements: entertainment, identity, expression, uniqueness, popularity, sexuality, power, aspiration, attention, affection, and relations. If there’s anyone out there who doesn’t want or need these things, I would be surprised. So, what we’ve shown is this demographic that at first seemed very mysterious is actually quite predictable in its desires when you break things down. So, getting back to product, the key is to think subtly about the ways each of these raw human levers are pulled in their lives. They certainly are not pulled in the same way for me as they are for the demographic we’ve been discussing. In fact, something I like might not resound at all with them, and vice versa. The devil is in the details. It’s not that the emotions themselves are different for different people, but the contexts around them certainly are.

Translating context can be as easy as changing ‘flirt’ to ‘holla at’, Zegna suits to Air Jordans, or the PGA to the NBA. It can be as hard, however, as having to completely rethink a communication medium because a certain demographic uses text messaging instead of email. Compare the demographic you’re building for to the one you’re most used to. What if the new demographic is less likely to care about friends’ recommendations of products? What if the social circles of the demographic are based on 100 looser relationships instead of 5 very close friendships? What if the demographic works on average 3 more hours in the day and has less time to spend on the computer? What if their interactions with others online are more direct and they won’t hesitate to send a bulletin to 300 people? What if they are more likely to give someone a virtual gift? Questions like these are the questions that need to be asked. They are extremely subtle. The raw emotions stay constant across demographics, but these minute details of context and process do not. They can shatter the success of a site that relies on an axiom of life that does not hold for the target audience.

So, if you understand the subtleties of the context, you can likely build a great product bottom up. Start with some strong emotional drivers, wrap them in appropriate context that fits the demographic, and tie them together with some core functionality that makes a user happy. I know this is easier said than done, but if you really understand you’re users and are good at evoking core emotion with products, you should have no problem. You just need to frame your attack to hit the right targets and use the right weapons.

So what is the actual product? I will leave that up to your creativity! The point of this wasn’t product. It was process. I get off easy this time :).