Nov 252007

The Facebook Fad

The Facebook Fad

I’m sure someone will shoot me for saying this, but I don’t get Facebook.  I mean, I get it, but I don’t see what all the fuss is about.  I made similar comments before about Gmail (here, here), and people told me I was an idiot at the time.  Three years later, Gmail is certainly a popular webmail service, but it’s hardly changed the world. In fact, it’s a distant fourth behind Yahoo, Microsoft, and AOL.  So I don’t feel so bad about not oohing and ahhing and slobbering all over the place about Facebook.

Facebook reminds me of AOL back in the day.  AOL was the most simple, elegant, general purpose entree for people who wanted to get online and weren’t sure how in the early days of online services, before the Internet came of age.  It was good at packaging up its content and putting everything “in a box.”  It was clean.  It was fun.  People bragged about being an AOL member and talked about their screen name like it was on their birth certificate or something.  And the company capitalized on all the goodwill by becoming a PR machine to perpetuate its membership growth.

Now Facebook — it’s the most simple, elegant, general purpose social networking site here in the early days of social networking.  It’s pretty good about packaging up its applications, and certainly opening up its APIs is a huge benefit that AOL didn’t figure out until it embraced the open web in 1999-2000.  It is pretty good about putting everything in a box for me as a member.  And like AOL, the company is turning into a PR juggernaut and hoping to use it to perpetuate its registration numbers.

But let’s look at the things that caused (IMO) AOL’s downfall (AOL as we knew it) and look at the parallels with Facebook.  AOL quickly became too cluttered.  It’s simple elegance was destroyed by too much stuff jammed into its clean interface.  It couldn’t keep up with best of breed content or even messaging systems inside its walled garden.  Spam crushed its email functionality.  It couldn’t maintain its “all things to all people” infrastructure on the back end.  Ultimately, the open web washed over it.  People who defected were simply having better experiences elsewhere.

The parallels aren’t exact, but there are certainly some strong ones.  Facebook is already too cluttered for me.  Why are people writing on my wall instead of emailing me — all that does is trigger an email from Facebook to me telling me to come generate another page view for them.  Why am I getting invitations to things on Facebook instead of through the much better eVite platform?  The various forms of messaging are disorganized and hard to find. 

Most important, for a social network, it turns out that I don’t actually want my entire universe of friends and contacts to be able to connect with each other through me.  Like George Costanza in Seinfeld, I apparently have a problem with my “worlds colliding.”  I already know of one couple who either hooked up or is heavily flirting by connecting through my Facebook profile, and it’s not one I’m proud to have spawned.  I think I let one of them “be my friend” by mistake in the first place.  And I am a compulsive social networker.  It’s hard to imagine that these principles scale unfettered to the whole universe.

The main thing Facebook has going for it in this comparison is that its open APIs will lead to best of breed development for the platform.  But who cares about Facebook as a platform?  Isn’t the open web (or Open Social) ultimately going to wash over it?  I get that there are cool apps being written for Facebook – but 100% of those applications will be on the open web as well.  It’s certainly possible that Facebook’s marrying of my “social network” with best of breed applications will make it stickier for longer than AOL…but let’s remember that AOL has clung to life as a proprietary service for quite a while on the stickiness of people’s email addresses.  And yet, it is a non-event now as a platform. 

It will be interesting to see how Facebook bobs and weaves over the coming years to avoid what I think of as its inevitable fate.  And yes, I know I’m not 18 and if I were, I’d like Facebook more and spend all day in it.  But that to me reinforces my point even more — this is the same crew who flocked to, and then quickly from, MySpace.  When will they get tired of Facebook, and what’s to prevent them moving onto the next fad?

Filed under: Email

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Mar 162007

Staying Power

Staying Power

I interview a lot of people.  We are hiring a ton at Return Path, and I am still able to interview all finalists for jobs, and frequently I interview multiple candidates if it’s a senior role.  I probably interviewed 60 people last year and will do at least that many this year.  I used to be surprised when a resume had an average job tenure of 2 years on it — now, the job market is so fluid that I am surprised when I see a resume that only has one or two employers listed.

But even the dynamic of long-term employment, as rare as it is, has changed.  My good friend Christine, who was a pal in college and then worked with me at MovieFone for several years before I left to start Return Path, just announced that she’s finally leaving AOL — after almost 11 years.  Now that’s staying power.  But most likely the reason she was able to stay at MovieFone/AOL for over a decade is that she didn’t have one single job, and she didn’t even work her way up a single management chain in a single department.  She had positions in marketing, business development, finance, operations, planning, strategy.  Most were in the entertainment field, so they did have that common thread, and some evolved from others, but the roles themselves had very different dynamics, skills required, spans of control, and bosses.

That’s the new reality of long-term employment with knowledge workers.  If you want to keep the best people engaged and happy, you have to constantly let them grow, learn, and try new things out or run the risk that some other company will step in with a shiny new job for them to sink their teeth into.  Congratulations, Christine, on such a great run at AOL — it’s certainly my goal here to keep our best people for a decade or more!

Filed under: Uncategorized

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May 082006

So, Where’d They Go?

So, Where’d They Go?

As we’ve reported a couple times in the past, one of our interesting nuggets at Return Path is a wealth of “ISP switching data” that comes from our very large, active, self-reported Email Change of Address, or ECOA, service (consumer sign-up; client info).

I noted the article floating around last week that AOL lost about 1 million subscribers last quarter, the lion’s share in the U.S., of course.

So, where’d they all go?

Well, according to our ECOA data, which may of course be somewhat skewed by our data sources (but has data from well over 1 million consumers each quarter), AOL users defected as follows:

To Yahoo! — 42.5%

To broadband providers in aggregate (cable, etc.)– 23.5%

To Hotmail/MSN — 19.5%

To Gmail — 2.7%

Thanks to my colleague Iffat Ahmed for help pulling these numbers together.

Filed under: Email

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Feb 062006

Victory for Email: AOL Enhanced Whitelist to Stay

Victory for Email:  AOL Enhanced Whitelist to Stay

It’s official.  AOL will keep its organic Enhanced Whitelist, clarifying that is not planning on replacing it with Goodmail’s email stamp program.  Goodmail will now be ONE way, not the only way, to reach AOL inboxes.  Charles Stiles, the postmaster for AOL, confirmed this earlier today on the phone with me, and I announced the news on CNBC’s Power Lunch (view the clip here).

This is a huge win for all companies who strive to do email the right way, earning the solid reputations that drive deliverability and response rates.  Paying for inbox reach is akin to only having paid search engine marketing – it works for some business models, not others; some consumers like paid ads, some don’t.  By having multiple ways to vet email inbox delivery, consumers keep a level of control over the process and marketers can decide which delivery solutions they do and don’t need.

When the news broke last week that the enhanced whitelist was going away, we took a pretty vocal stance that it was a bad idea for the email industry, our clients and consumers.  It was not so much Goodmail that we were against (though we do not think that email stamps are the right solution to spam for many reasons), but the notion that the only way to gain inbox assurance was by buying it.   We’re happy to see that AOL agrees with that.

So, email marketers and publishers, we encourage you to keep the important thing in mind:  your email reputation remains critical in getting delivered at AOL and every other ISP.  Do what you can to make sure your reputation is solid, and your email program will benefit with high delivery and response rates.

Filed under: Email

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Feb 032006

Why Email Stamps Are a Bad Idea

Why Email Stamps Are a Bad Idea

(also posted on the Return Path blog)

Rich Gingras, CEO of Goodmail is an incredibly smart and stand-up professional.  I’ve always liked him personally and had a tremendous amount of respect for him.  However, the introduction of the email stamp model by Goodmail is a radical departure from the current email ecosystem, and while I’m all for change and believe the spam problem is still real, I don’t think stamps are the answer.  Rich has laid out some of his arguments here in the DMNews blog, so I’ll respond to those arguments as well as add some others in this posting.  I will also comment on the DMNews blog site itself, but this posting will be more comprehensive and will include everything that’s in the other posting.

It seems that Goodmail’s main argument in favor of stamps is that whitelists don’t work.  While he clearly does understand ISPs (he used to work at one), he doesn’t seem to understand the world of publishers and marketers.  His solution is fundamentally hostile to the way they do business.  I’m happy to have a constructive debate with him about the relative merits of different approaches to solving the false positive problem for mailers and then let the market be the ultimate judge, as it should be.

First, whitelists are in fact working.  I know — Return Path runs one called Bonded Sender.  We have documented several places that Bonded Senders have a 21% lift on their inbox delivery rates over non-Bonded Senders.  It’s hard to see how that translates into “bad for senders” as Rich asserts.  When the average inbox deliverability rate is in the 70s, and a whitelist — or, by the way, organic improvements to reputation — can move the needle up to the 90s, isn’t that good?

Second, why, as Goodmail asserts, should marketers pay ISPs for spam-fighting costs?  Consumers pay for the email boxes with dollars (at AOL) or with ads (at Google/Yahoo/Hotmail).  Good marketers have permission to mail their customers.  Why should they have to pay the freight to keep the bad guys away?  And for that matter, why is the cost “necessary?”  What about those who can’t afford it?  We’ve always allowed non-profits and educational institutions to use Bonded Sender at no cost.  But beyond that, one thing that’s really problematic for mailers about the Goodmail stamp model is that different for-profit mailers have radically different costs and values per email they send.

For example, maybe a retailer generates an average of $0.10 per email based on sales and proit.  So the economics of a $0.003 Goodmail stamp would work.  However, they’re only paying $0.001 to deliver that email, and now Goodmail is asserting that they “only” need to pay $0.003 for the stamp.  But what about publishers who only generate a token amount per individual email to someone who receives a daily newsletter based on serving a single ad banner?  What’s their value per email?  Probably closer to $0.005 at most.  Stamps sound like they’re going to cost $0.003.  It’s hard to see how that model will work for content delivery — and content delivery is one of the best and highest uses of permission-based email.

Next, Rich’s assertion that IP-based whitelists are bad for ISPs and consumers because IP-based solutions have inherent technology flaws that allow senders to behave badly doesn’t make sense.  A cryptographically based solution is certainly more sophisticated technology — I’ve never doubted that.

In terms of the practical application, though, I’m not sure there’s a huge difference.  Either type of system (IP or crypto) can be breached, either one is trackable, and either one can shut a mailer out of the system immediately — the only difference is that one form of breach would be trackable at the individual email level and the other would only be trackable in terms of the pipeline or IP.  I’m not sure either one is more likely to be breached than the other — a malicious or errant spammy email can either be digitally signed or not, and an IP address can’t be hijacked or spoofed much like a digital signature can’t be spoofed.

It’s a little bit like saying your house in the suburbs is more secure with a moat and barbed wire fence around it than with locks on the doors and an alarm system.  It’s an accurate statement, but who cares?

I’m not saying that Return Path will never consider cryptographic-based solutions.  We absolutely will consider them, and there are some things around Domain Keys (DKIM) that are particularly appealing as a broad-based standard.  But the notion that ONLY a cryptographic solution works is silly, and the development of a proprietary technology for authentication and crypotgraphy when the rest of the world is trying desparately to standardize around open source solutions like DKIM is an understandable business strategy, but disappointing to everyone else who is trying to cooperate on standards for the good of the industry.  I won’t even get into the costs and time and difficulty that mailers and ISPs alike will have to incur to implement the Goodmail stamp system, which are real.  Now mailers are being told they need to implement Sender ID or SPF as an IP-based authentication protocol — and DKIM as a crypto-based protocol — and also Goodmail as a different, competing crypto-based protocol.  Oy vey!

Email stamps also do feel like they put the world on a slippery slope towards paid spam — towards saying that money matters more than reputation.  I’m very pleased to hear Goodmail clarify in the last couple of days that they are now considering implementing reputation standards around who qualifies for certified mail as well, since that wasn’t their original model.  That bodes well for their program and certainly removes the appearance of being a paid spam model.  However, I have heard some of the proposed standards that Goodmail is planning on using in industry groups, and the standards seem to be much looser than AOL’s current standards, which, if true, is incredibly disappointing to say the least.

Jupiter analyst David Daniels also makes a good point, which is that stamps do cost money, and money on the line will force mailers to be more cautious about “overmailing” their consumers.  But that brings me to my final point about organic deliverability.  The mailers who have the best reputations get delivered through most filtering systems.  Reputations are based largely on consumer complaints and unknown user rates.  So the mailers who do the best job of keeping their lists clean (not overmailing) and only sending out relevant, requested mail (not overmailing) are the ones that will naturally rise to the top in the world of organic deliverability.  The stamp model can claim one more forcing function here, but it’s only an incremental step beyond the forcing function of “fear of being filtered” and not worth the difficulty of adopting it, or the costs, or the risks associated with it.

Rich, I hope to continue to dialog with you, and as noted in my prior posting, I think separating the issues here is healthy.

Feb 032006

AOL and Goodmail: Two steps back for email, Part II

AOL and Goodmail: Two steps back for email, Part II

(also posted on the Return Path blog)

There’s been a lot of noise this week since the news broke about AOL and Goodmail, so I thought I’d take the opportunity to change the direction of the dialog a little bit.

First, there are two main issues here, and I think it’s healthy to separate them and address them separately. One issue is the merits of an email stamp system like the one Goodmail is proposing, relative to other methods of improving and ensuring email deliverability.  The second issue — and the one that got me started earlier this week – is the question of AOL making usage of Goodmail stamps a mandatory event, replacing its enhanced whitelist.  To really separate the issues, this posting will tackle the second question, and the next posting will tackle the first question.

I have reached out to Charles Stiles this morning to try to clarify AOL’s position on Goodmail.  Initially, it was reported in the press that AOL was discontinuing their enhanced whitelist on June 30, and that Goodmail stamps were the only option available to mailers who wanted guaranteed delivery, images, and links in their emails via the enhanced whitelist.  But Charles has subsequently made some unofficial comments that the AOL enhanced whitelist will live on as an organically-driven or reputation-earned entity, and that Goodmail stamps will just be one option of many to gain enhanced whitelist status.  This is a critical distinction, and one that AOL needs to make.

If in fact they are not shutting down their enhanced whitelist on June 30 as reported and forcing thousands of mailers to use Goodmail as opposed to organically earning their way onto the enhanced whitelist, then I will help them publicize the correction since I’ve been such a vocal critic.  That would be great for the industry, and it’s my biggest hope that something good will come out of this controversy.

If AOL is making Goodmail the king — the only way to reliably reach users inboxes — then my complaints stand:  the lack of affordability for many mailers is problematic; the threat of a monopoly is real; and the absence of an organic route for mailers who have clear end-user permission to send email and sterling reputations runs counter to the entire spirit of the Internet.  AOL can accept Bonded Sender or not, although I hope they do some day.  But to tell mailers they have no other option, and in particular no organic option, to use the AOL enhanced whitelist to properly reach customers who are requesting their email is akin to Google telling the world that they will only present paid search results in the future, and that organic search is dead.

Can you imagine how well that would go over?

Filed under: Email

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Feb 012006

AOL and Goodmail: Two steps back for email

AOL and Goodmail: Two steps back for email

(posted on the Return Path blog a couple days ago here)

Remember the old email hoax about Hillary Clinton pushing for email taxation? When we first heard AOL’s plans for Goodmail today, we thought maybe the hoax had re-surfaced and a few industry reporters got hooked by it. But alas, this tax plan seems to be true.

AOL has long held the leading standard in email whitelisting. Every email sender who cares about delivery has tried to keep their email reputation high so that they could earn placement on AOL’s coveted Enhanced Whitelist. Now, AOL may be saying that those standards don’t matter as much as a postage stamp when it comes to email delivery.

AOL will begin phasing out its enhanced whitelist in favor of Goodmail’s brand new and untested certification program — which requires a fee for each email sent. This effectively encourages marketers and senders to focus not as much on email best practices but on paying cash for inbox reach. It punishes companies who already do everything right with email by adding another roadblock before they can reach customers.

With senders having to pay a fraction of a cent for each email sent, the fees for companies (and profits for AOL and Goodmail) will mount and good mailers will not always be able to participate — even if they have a pristine email reputation and customer relationship. This is in effect taxation of the good guys with cash – and it does nothing to help the good guys who can’t afford the cost or to deter the bad guys who just plan to spam anyway.

Email getting delivered to the mailbox should be based on the reputation of the sender — not whether they paid for guaranteed delivery. Now AOL is saying that isn’t enough. By charging significant dollars for email delivery, AOL and Goodmail are on the road to creating a “pay to play” model that puts subscriber benefit and sender equality second.

Goodmail reportedly uses some reputation data to determine “good” senders. What data do they use? Is it comprehensive? It is our strong opinion that email delivery should be based on a solid email reputation. That reputation should be based on a comprehensive set of data points including in-depth complaint rates, unknown user rates, spam trap data, permission practices, email infrastructure, volume of email sent and identity integrity, among a long list of other factors.
If Goodmail looks at less data than AOL currently uses … so how can it be better?

AOL stands to make a lot of money at the risk of setting back email as best practices-based marketing. This is bad for senders who care about setting high email standards, bad for consumers’ inboxes and simply, bad policy.

There’s been a ton of coverage of this problem, including this great one today in DMNews.  Look for a lot more reaction from the industry to this once people really understand what’s going on.

Filed under: Email

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Nov 152005

Counter Cliche: Head Lemming

Counter Cliche:  Head Lemming

Fred’s VC Cliche of the Week last week was that leadership is figuring out where everyone is going and then getting in front of them and saying “follow me.” While it’s certainly true that juming out in front of a well-organized, rapidly moving parade and becoming the grand marshal (or maybe the baton twirly person) is one path to successful leadership, CEOs do have to be careful about selecting the right parade to jump in front of for two reasons.

First, just because lots of people are going in a specific direction doesn’t mean it’s right.  There’s nothing good about ending up as the Head Lemming.  It just means you go over the cliff before the rest of the troops.  Lots of smart people thought home delivery of a stick of gum made sense and was worth investing in, but it certainly put a kink in George Shaheen’s career.

Second, even if the parade is a good one, the organization you run might not be best equipped to take advantage of it.  Again, you find yourself in the undesirable position of being the Head Lemming.  Gerry Levin and Steve Case fell in love with convergence story (one of the biggest parades of the last 10 years), but in the end, Time Warner and AOL just couldn’t cope with the merger.  Neither Gerry nor Steve survived the merger.

So if you’re going to follow the VC cliche and jump out in front of a crowd to lead it, make sure you select your crowd carefully.

May 312005

Just Say No

Just Say No

A recent study by AOL (published here in CNET) says that on average, people in America check email five times per day and can’t go without it for more than three days at a time.  And six out of ten respondents said they check email on vacation.

While I’m as guilty as anyone of perpetuating these statistics, I am a big fan of taking regular time off from email.  Whether it’s a day each week, or a whole weekend here or there, or at least one week vacation per year, it’s important to Just Say No every once in a while.  Even Fred took an email holiday recently, to great success, I believe.  The great thing about email is that they’ll all be there waiting for you when you log back in.

Filed under: Email

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Apr 212005

Gmail, I Don’t Get It, Part III

Gmail, I Don’t Get It, Part III

This is the third in a somewhat drawn-out series of postings on Gmail featuring some interesting data from Return Path’s Email Change of Address service, which captures self-reported address change data from nearly 1 million consumers every month.

The first posting, back when Gmail launched nearly a year ago, was that I didn’t understand the fuss.  This is even more true now that Yahoo is in a “free storage” war with Google.

The second, in November, had some change of address stats reporting that the numbers of people joining Gmail was tiny relative to other ISPs…and also that Gmail was starting to have people switch away from it, but only at the rate of about 1 for every 3 people joining it.

So we have some new updated data now from the first quarter that are even more interesting.  First, the number of people joining Gmail seems to have flattened out over the last couple of months.  Our metric is about 14,000 in each of the last few months (remember, that’s not the whole number, just 14,000 out of our 1 million).  But the flattening is the highlight.  There’s still the same competitive set — lots of Hotmail churn, some Yahoo, very little from AOL and other providers.

Here’s the kicker, though.  At least within our data set, we actually saw more people LEAVE Gmail than join Gmail in February and March.  That surprised me quite a bit.  One side note, about 9% of the change volume for Gmail is people changing from one Gmail account to another.

Is Gmail in trouble?  I doubt it.  But I do continue to wonder if they’ll ever be able to achieve the market share in email that people predicted at the beginning of Gmail.

Filed under: Email

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