I just wanted to let you all know about an upcoming new design conference called “Warm Gun: Designing Happiness“. I’m an adviser working with Dave McClure (500 hats) on it. Today I posted info on Brilliant FORGE about a logo design contest for the conference. This is a great opportunity for a talented designer or a design agency to get recognized. In addition, the winner gets a free pass to the conference. The conference has some serious backing (from folks like Dave and Sean Parker, from the Founders Fund) and there will be some really talented people and great startups at the conference.

More info here

Good luck!

As you may have heard through the grapevine, after 4 years of an incredible roller coaster ride with Yahoo, the time has come to move on to other opportunities. I am bootstrapping my own stealth (for now) startup. In parallel, today I’m launching a consulting practice to provide advisory services to other startups and more-established companies. After over 8 years in the big corporate worlds of Yahoo and eBay, I’m excited about taking everything I’ve learned from my experiences at those two great companies and returning to the entrepreneurial world.

Yahoo has amazing and loyal talent, and I am very proud of what my Search team accomplished over the past four years. I obviously cannot capture it all, but I wanted to share highlights of just a few great products they delivered:
• Relaunching Yahoo! Search in Oct 2007 with industry-leading Search Assist features
• Bringing structured data into Web Search for the first time with Y! SearchMonkey
• Opening up Search technology to the world like never before with the Yahoo! Search BOSS platform
• Bringing true applications to Search with Search Pad
• Launching an entirely new Y! Search experience again in Sep 2009
• Creating incredibly engaging Image and Video Search experiences
• Integrating Twitter and real-time content in Nov 2009
• An addictive entertainment Search experience that launched this March
• And finally, the truly fun Yahoo! Sketch-a-Search app on the iPhone
 
It has been a real pleasure to work with such a talented and passionate team. I’m going to miss everyone and I wish them the best of luck. Keep fighting the purple fight, guys!

- Larry

P.S. Now that I no longer have a free coffee bar, I had to undertake the arduous task of discovering all of the best coffee in the South Bay. Here is my list on Yelp. I work hard so you don’t have to.

I guess I shouldn’t be surprised, but it is disappointing when a company starts behaving like an incumbent politician. There are those who firmly believe that incumbents are heavily influenced by campaign contributors and special interest groups; often forgetting the needs of the constituents who they are truly supposed to represent. Similarly, there are established companies that lose focus on the very customers who made them successful. With their drive to maximize revenue and profitability, instead they find that slowly over the years they start spending more and more of their time catering to their advertisers. This is sadly ironic, given that those advertisers are only interested in the eyeballs and wallets of those very customers. Lose the audience, lose the advertisers.

Now, don’t get me wrong. I know that companies need to generate revenue to survive and thrive. I just believe that they should align their revenue models with the needs of their customers. In essence, happier customers should equal more revenue. Instead it seems that too many companies generate revenue by placing obstacles (i.e., often irrelevant ads) between users and their goals, hoping that they will click those ads along the way. They need to take a long, hard look at the performance of the advertising on their site, especially the traditional display CPM advertising. Would the click-through rate (CTR) on those ads be so low if they were really adding value to the experience, if they were truly targeted for the user, and if they were mapped more closely to what users are looking for? Please.

Performance-based advertising is certainly one way to improve the experience, since it is in the best interest of the publisher to target high-quality ads to the right user at the right time. And there has long been talk of Cost-per-Lead (CPL) and Cost-per-Action (CPA) slowly replacing CPM and CPC advertising. However, many feel that the pendulum swings way too far to the side of the advertiser with these models. In addition, the lower volume of campaigns and complexity of tracking and confirming transactions present challenges for both advertisers and publishers. A new hybrid model is in order for a better long-term solution, but it won’t happen overnight.

Dave McClure points out in this post that we’ve been living with this flawed model for too long (Caution: Rated TV-MA for strong language):

We have largely WASTED an entire web decade of time, energy & venture capital on extremely inefficient revenue models. There have been a few interesting examples of startups acquired in the 00’s for large amounts due to amazing growth (eGroups, MySpace, Skype, YouTube) or advertising potential (aQuantive, DoubleClick, AdMob, RightMedia). However, mostly the decade has been an uninterrupted string of uninspiring business models and small-time acquisitions of Web 2.0 startups filled with rainbows & unicorns, rather than those based on simple, transactional revenue models…. Gradually we are discovering that the default revenue model on the internet should probably be the simplest one — that is: basic transactions for physical or digital goods, and recurring transactions (aka subscriptions) for repeat usage.

So, certainly one path to increasing independence from this often unnatural relationship with advertising is to create and/or offer something of value that customers actually want to pay for. Wow. Imagine that. But, since the dependence on advertising revenue may never go away, we also need to invest in new marketplace models that incent both advertisers and publishers to truly cooperate to deliver high quality, highly-targeted, relevant advertising to consumers when and where it is appropriate, so that they knowingly engage and receive real value from what the advertising offers. Companies need to remember the fundamental reason they have achieved scale and success: Consumers choose to spend their increasingly precious time and dollars with them. The revenue they derive from selling that “attention” to advertisers can and will disappear if they forget that.

I have always loved live entertainment events. Concerts, comedians, music festivals; you name it. But, I have noticed an interesting shift over the past couple of years. I no longer have the patience for large venues. With the increasing quality of home entertainment systems and faster broadband pipelines, the entertainment decision is becoming harder. Do you go out for an event and endure skyrocketing ticket prices, challenging commutes and parking, standing in line, and crowded venues? Or, do you simply stay home and watch an event in HD with surround sound on the comfort of your living room couch?

Last summer, I visited the Mountain Winery in Saratoga, CA to see Brian Regan, one of my favorite comedians. The Mountain Winery is actually a pretty small venue, with incredible views of the Valley (image in this post). And, I had what I thought were pretty decent seats. But, I wasn’t in the first couple of rows directly in front of Brian. He’s a very physical comedian and I came to realize that a great deal of his impact is due to his facial expressions. I was far enough away and to the side that I really couldn’t see his expressions clearly enough. That made all the difference in the performance. After that disappointment, I decided that I would no longer go to large venues for comedy. Another one of my favorite comedians was in San Francisco recently. But, the venue was fairly large and I didn’t get tickets early enough to be in the front rows. So, I passed. Now, I won’t even bother going to a show unless I can get a great seat in a small venue. Just not worth the hassle.

Check out this Huffington Post article from Michael Kaiser, President of the John F. Kennedy Center for the Performing Arts, where he shares his own concerns that live arts will become irrelevant:

For two tickets to an opera you can now buy a computer and watch Leontyne Price and Joan Sutherland on YouTube for free! No wonder so many people have stopped going to performances. A recent study by the NEA showed that a huge number of people are getting their arts exposure on-line and fewer are coming to the theater. No wonder so many arts organizations are suffering. Without audiences we receive no ticket revenue and the audience members we lose cease to donate as well. The claim that the arts are irrelevant is getting difficult to dispute.

A recent NY Times article also highlighted this issue, specifically referring to the financial troubles the Philadelphia Orchestra has been facing. And this isn’t unique. Several orchestras in the US are suffering in this economy.

And, it isn’t just the music industry. It is pretty clear from this LA Times article that sports has been taking a hit too:

Nearly every sport and sports team took hits, from layoffs to dips in ads, attendance and sponsorships. The Arena Football League canceled its 2009 season. The NHL’s Phoenix Coyotes filed for bankruptcy protection in May.

Several sports economists blame the downturn on a trend that started 20 years ago, when many major sports leagues shifted their focus from typical middle-class fans to corporations. That shift led to bigger stadiums and steady increases in prices all around to help pay for them.

Certainly part of the problem is the economy. It is hard to justify spending a lot of money on these events if your job is at risk or you’re struggling to cover the basics. But, part of this change is also due to a faster-moving shift to online entertainment. Improved systems performance, easier online transactions, micropayments, and the ability to interact and engage with others through social models have all created a more engaging and immersive experience. And, I think that is the key. There is a critical element here that is similar to the effect in really small entertainment venues:

You enjoy an interaction with the artist, the performer, and the other audience members that simply isn’t possible in large venues. In some sense, you are creating part of the experience yourself and that is where the new value will be created. As Max Levchin, CEO of Slide, stated in this recent Forbes interview:

The things of value inside these worlds have to be primarily created by the participants. That’s where our plans are. The real open question is whether these virtual worlds are a stepping stone between the shift from real economy to a completely virtual economy.

So, what are the venues going to do to survive? Basically, for large venues, they better start creating new and engaging experiences that offer much more than a consumer can get from the best high-speed, HD, surround-sound experience. Give us a reason to attend. Create an experience that we can only truly enjoy if we are physically there. And, instead of packing larger and larger audiences into mega-venues, I believe they should also focus on expanding into smaller, more intimate venues to acquire broader, more local audiences.

And, what are entertainers going to do? Some are already embracing the shift to online. Rather than bemoan the drops in attendance at physical venues and complaining about digital piracy, they are engaging with the game industry, social sites, etc. to weave themselves into new forms of performance art. And at least one orchestra that I know of is dynamically responding to these shifts in consumer behavior by providing a service where the audience becomes part of the experience. Literally. At a recent Yahoo! offsite, we had a surprise performance from a small orchestra that was seated amongst us. I have never enjoyed classical music in such an up close and personal experience before (well, not since when I used to play). Nothing like standing right next to talented musicians as they pour their souls into their instruments. That was indeed a transformational experience and they accomplished their goal of reminding all of us of the beauty of live music and pulling us back into an intimate venue and off our couches.

I dropped in on Barefoot Coffee yesterday to enjoy one of their fabulous Cubanos and noticed they had remodeled. It still feels cozy there, but it lost a bit of its independent spirit. I’m going to miss their quirky chairs. But, they still pull a great espresso drink and they still create nice latte art. And that, with a number of other touches, make Barefoot one of those sanctuaries that you seek out when you want a great cup of coffee that doesn’t come from the faceless corporate chains. I have a similar experience in one of my favorite dark little coffee houses in NYC, Caffe Reggio (image in this post). The funny thing is, I will go considerably out of my way to visit these places, when I could simply grab a drink at a place like Starbucks. Easy enough, since there is one within every quarter-mile radius.

Got me to thinking: How could this be extended to other products and services? Definitely easier with a local business, where you can create an atmosphere for your clients. Can also be more easily extended to services, where you can create that sense of comfort and trust through a personal connection. Much harder with other products and online services, but not impossible. Consider the latte art example. They don’t “need” to do that. It takes extra time. And they actually practice so that they can create some pretty incredible art and even enter competitions. It’s really about investing that extra time and, yes, costs to add delight and elegance to your product or service. Apple does it with their packaging and new buyers delight in the unpacking process. Heck, they even take photos and create videos of it to share.

Don’t you wish your customers did that? I’m sure you invest considerably in marketing and advertising, or you should be. Take some of that investment and roll it instead into making your product surprisingly delightful. Turn those customers into a grassroots channel whereby they are sharing their positive stories on Twitter and Facebook, uploading photos to Flickr, and sharing videos on YouTube.

The next time you’re streamlining and reducing costs, think really hard before you cut those delightful features and experiences or don’t even invest in them in the first place. View your product or service with “fresh eyes” or hire a research team to do it for you. Answer the really hard and sometimes intangible questions: Are you delivering delight? Do you add those extra touches that make someone smile? Are you creating a sanctuary from the chaos of your customers’ lives and the world around them, so that they feel comfort and pleasure in using your product or service? If you truly are, they are going to go considerably out of their way for you and pass right by your “Starbucks”, whoever that may be.

The Yahoo! Search team,
originally uploaded by Yodel Anecdotal.

See if you can find me. A “Where’s Waldo” experience

I have always been interested in trying noise-cancelling headphones when I fly. But, I prefer the portability and comfort of in-ear headphones. So, until recently, there weren’t many desirable options. Then I discovered the audio-technica ATH-ANC3 in-ear noise-cancelling headphones at my local Apple Store.

From the audio-technica site:

Electronics in the control box create a noise-cancelling wave that is 180° out of phase with the ambient noise. This wave acts like a noise eraser: it cancels out the annoying sounds that surround you without diminishing the audio you want to hear. The result…a peaceful enclave to enjoy the music or movies of your choice.

I found the headphones to be quite comfortable for a long flight. The sound quality is good, but perhaps not quite as good as my Etymotic earphones. But, the most dramatic thing I noticed was how much I could reduce the volume when the noise-cancelling was turned on. While I was on the plane, I turned on the noise-cancelling switch and adjusted the volume to be comfortable. Then, I turned off the noise-cancellation. The engine noise from the plane was so loud that I literally could no longer hear the music at all. Basically, without the noise-cancellation, you have to turn up the volume way beyond a normally comfortable level. Not good.

So, I’m sold. I take them with me on all flights now. And what a difference it makes! One simple product that makes the experience of flying a little more enjoyable.

After I missed a few critical email messages recently, I spent a good part of today simply trying to get my email inbox under control. Over the past decade, the “email problem” has slowly grown into an unmanageable beast. I looked at my work inbox today (this isn’t even counting my personal email accounts) and noticed I had over 18,000 emails in the Inbox alone, with over 3000 marked unread (and I file and filter even more than that). Ouch. Staying ahead of email, responding to one as several more come in, has become a Sisyphean task. Quite simply, email is failing us. The system hasn’t scaled with the volume and variety of communication we deal with today.

I’m obviously not alone in reaching this massive point of failure in the email system:

• Lawrence Lessing publicly declares email bankruptcy
• TechCrunch’s Michael Arrington returns from a trip and decides to simply delete his entire inbox
• Andrew Baron starts over as well, telling everyone to resend their email if it was important

This initial blessing has become a curse, as with many technology solutions. In some ways it reminds me of music CDs. When digital music on CD first came out consumers were thrilled, and they should have been. CDs were a huge improvement over cassette tapes. But, much like email, CDs simply didn’t scale. It might be fine for a person with a moderate music library to have dozens of CDs. But, for heavy music lovers, having hundreds or thousands of CDs was ridiculous. Finally, along came MP3 players and the beloved iPod. Now, you can fairly easily manage a music library that scales.

So, what to do about email? There are many, many people offering a host of tips, tricks, and tools for supposedly managing your email. Yes, I know all about filters and autoresponders and etc., etc. Have tried them all, used them all. Too much work. Some recommend time management strategies. For example, Timothy Ferriss’ tip that you should only check email twice a day. Good tip for not letting email addiction fragment and destroy the rest of your day. But, still doesn’t solve the massive volume problem.

One approach is already in play: Big changes in how existing email applications work. At CES this year, Jerry Yang showed the future of a smarter email inbox that could prioritize the most relevant connections in your life. Leveraging the knowledge of who you care about and interact with the most holds promise for making all of your communications easier to manage (email, IM, SMS, file sharing, etc.). Xobni is yet another solution promising to enhance your existing Outlook email application to give you “effortless email management”.

I’m sure that these approaches will make email better. No doubt about that. But, who is going to come along and “iPod” the whole thing? Give us a whole new way to manage our communications with others? That is what I’m looking forward to.

Well, we finally announced it. Yahoo Search is going way open very soon. We will be allowing publishers and site owners to provide us with additional information about their site. This will provide a next-generation search experience with results that can display some of the rich data that is today only available on the website after the user clicks through. For example, ratings and reviews, great photographs, useful site links, etc. The additional beauty is that users can control whether they want to see this additional info or not. Their choice. A picture captures the essence of this better than my description (see below).

An Open Approach to Search
The open theme continues today as we are announcing that we are opening up Yahoo! Search itself. That’s right — you heard it correctly — the Yahoo! Search experience will soon be open. This open search platform enables 3rd parties to build and present the next generation of search results. There are a number of layers and capabilities that we have built into the platform, but our intent is clear — present users with richer, more useful search results so that they can complete their tasks more efficiently and get from “to do” to “done.” Read full blog post…

Good coverage and comments on TechCrunch. Want to learn more about our Open Search Platform? Sign up here

Key Highlight
Yahoo isn’t afraid to shake up the traditional web search paradigm in order to give users what they need: More useful search results that will help them get things done more efficiently. The end result will be something that is not only good for users, but also good for web site owners.

Yes, I’m an early adopter. That’s why I bought an Apple TV last year. And, I will admit that it has mostly just been an experimental toy until now. The biggest benefits? Being able to access my iTunes library of music and view my photos all from my living room entertainment system. My kids love going through all of our photos on the big screen HDTV. The YouTube videos were fun for a little while, but that faded quickly.

The 2.0 Upgrade
However, the latest 2.0 software upgrade finally made it a lot more interesting. Now I can instantly rent movies (including a number in high-definition with Dolby Digital 5.1 surround sound), buy TV shows, and browse Flickr photos on my widescreen HDTV (and I love Flickr). The downsides are that it does take a long time to download a movie (especially an HD movie), once you start a movie you have to finish it in 24 hours, and they need more titles.

Instant Movies + Variety
I do already have Pay Per View movies through DirecTV. The instant purchase and instant on do provide instant entertainment gratification. But, the variety is sorely lacking. Way too many PPV channels of the same titles. I am also a Netflix subscriber and a big fan of the service. They have a huge library of titles and a nice recommendations engine. The only drawback is that you have to wait. They do offer a movies download service if you have a Windows PC, but no solution yet if you are an Apple house (unless you’re running Parallels). So, if you feel like a movie right now, you’re out of luck.

Key Highlight
Consumers like instant gratification and the movies entertainment business is shifting rapidly to meet that need. PPV, Netflix, and movie downloads are all competing to be this movies-on-demand solution. The only barrier now seems to be bandwidth. Once that problem is solved, the winners in this space will be the ones who can provide consumers with the largest number of high-definition movie titles instantly available with one click.