My Take on the Web 2.0 Summit

Web 2.0 was one of the most interesting events I've ever been to, and I've been to a lot of them over the past 20 years. John Battelle and Tim O'Reilly know how to put on a show, and what a show it was! Part of my wide-eyed amazement was clearly due to the fact that I am new to the technology/entrepreneurial world, having only really been a part of it for the past 18 months. But beyond that, I got a flavor for what has made certain companies and managers very successful, as well as gaining a window into some of the trends that will unfold across the technology landscape over the next 12 months and beyond. Certain themes continued to pop up that have broad relevance for management approaches, strategic planning and adapting to a rapidly shifting marketplace, and as I run through some of the really interesting stuff I saw I'll share some of my observations with you.

Wall Streeters are from Mars, Entrepreneurs are from Venus

But before that, I feel compelled to share one particularly interesting observation: the difference between competing on Wall Street and competing on Start-up Street is night and day. It took me a while to figure this out, as the cultural shift was abrupt and dissonant at first. While I generally had a cordial relationship with my competitors during my time on the Street, there certainly wasn't any collaboration, any material idea sharing, or any "Hey, you might want to interview this person. They'd be really great for you." Pretty much, Wall Street is a zero-sum game. I win; therefore you lose. Cooperation is (generally) not rewarded (unless you are discussing "club deals" in private equity and the like, which may or may not be anti-competitive, but anyway...), because in most cases in transactional/trading businesses the outcomes are digital - there is no gray. As a result, I was acculturated to be a royal hard-ass. Protective of my teams, my territory and my IP. This, as I've come to learn, is not exactly the case with start-ups in general and entrepreneurs in particular.

There seems to be the concept of both enlightened self-interest and a "karma boomerang" among entrepreneurs. While start-up managers are super competitive and want to win as bad as any Wall Streeter (if not more), there appears to be a tacit code of cooperation and a "we're in this together and trying to change the world" mind-set that permeates the dialogue. I just wasn't used to this kind of collaboration, sharing and communication with my competitors during my Wall Street days. And this also applies to my interactions with VCs. I came to my initial discussions with the following frame of mind: "I am assuming you are trying to screw me. Therefore you need to prove to me that you are trustworthy and that your intentions are totally above board." In short, I seemed like some hostile, alien life form (Martin, to be specific, like the dude on Bugs Bunny with the funny brush hat). After I figured out that yes, they certainly want to do the best deal for themselves, but that there is an inherent balance built into the transaction (because a pissed off entrepreneur does nobody any good) and that they generally possess good intentions, I mellowed out. But I've really had to alter my perspective since entering this world. And I like it - a lot. While I am still a Martian at my core (once a deal guy, always a deal guy), I can now hang with folks from Venus without freaking them out.

I Just Saw Some of the Most Amazing People Ever

Here is a brief review of the people and presentations that were most impactful to me (in the order of when I saw them at Web 2.0):

1. Eckart Walther - VP Products, Yahoo! Search

Eckart and his team are a bunch of really smart dudes who totally get community and the importance of engagement. He used phrases like Empowering People to Participate in the Web and Find, Use, Share and Expand the World's Knowledge and backed them up with awesome examples. He also went on to describe the Publisher/Web 2.0 Ecosystem while his colleague, Conn Fishburn (Director, Client Strategy Group) discussed the evolution from Mass Media => My Media => We Media to The Network is the Platform and the four pillars of Yahoo!'s DNA - content, personalization, community and search. My sense is that these guys really listen to their users, and spend a tremendous amount of time understanding the needs and wants of their communities. I know Yahoo! has been under a tremendous amount of heat lately, but I've got to tell you that they've got a firm grip of the issues at hand and their heads are screwed on straight. Not that they don't face daunting challenges, but they have a wealth of ideas and energy that has got to be a leading indicator of success. I am really excited to see what they release over the next year – I’m sure it will be quite cool.

2. Jeff Barr - Senior Evangelist, Amazon Web Services

Both Jeff's discussion on Tuesday and his boss Jeff Bezos's presentation on Wednesday were awesome, exciting and truly revolutionary (at least to me). The vision: a world where developers and organizations can focus on ideas, without the need to worry about core infrastructure – storage and raw processing power. And these competencies and capacities are already resident at Amazon.com, so why not maximize uptime, make money and do good, all at the same time? Believe it or not, this has a direct analogy in the hedge fund world – it is called a “hedge fund hotel,” where operations and administration functions are subbed out to others in order that traders and analysts can focus on what they do best: make money. My group DB Advisors was also run with this ethos - focus on making money, not the administrative crap. So here, you've got developers with great ideas who can focus on code development and go-to-market strategies without the costs or worries of back-end hardware and administration. F*cking cool. Yeah, he also talked about Mechanical Turk and their fulfillment capability (that more fully utilizes their 10 million square feet of high-tech warehouse space and logistics infrastructure), but I found this stuff to be a sidelight to the storage and processing power play. See related comments under Jeff Bezos below.

3. Eric Schmidt – CEO, Google

Where to begin. Eric is one sick-smart dude. Big brain, phenomenal communicator, great advocate and articulator of the democratizing influence of the Internet. He talked about Google as a platform, with applications that simply make people’s lives easier. Most of the stuff he discussed about the Company you and I already know, like the focus on recruiting, the 70/20/10 structure of a Googler’s workday, etc. The thing he said that really made me take note were his comments on management and organizational structure. He talked about the primacy of the small team, even in the massive organization that Google has become. He also talked about the setting of goals and objectives. Rather than management setting a list of priorities and having teams build strategies around these priorities, management sends out a list of questions and asks people to answer the questions. In this way the conversation is bounded by the questions, but the range of potential approaches for addressing the questions is limitless. This fosters creativity and provides myriad perspectives for addressing a problem, which I thought was an absolutely brilliant way of designing a goal-setting process. Basically, he solicits input from and listens to the sickly smart people that work for him, Sergey and Larry. Seems pretty basic in principle, but to actually manage this way is truly awesome. It doesn’t seem that they’ve let all that success go to their head – yet.

4. Jack Ma – CEO, Alibaba

Jack is an absolute rock star. What he has accomplished, and the US-based powerhouses he has crushed into dust, is beyond belief. Google, EBay and Yahoo! are no match for him on his turf. Jack has patience – something woefully lacking in most of us from the US. This lack of patience is one of the reasons he said the Big Three have flopped so badly in China. He has built Alibaba in a deliberate manner, really listening to his core constituencies and reacting to their feedback. He knows this is a marathon and not a sprint, so he is the turtle (waddling pretty fast, though) passing the hare by who has burned itself out. He talked about the importance of finding the best local talent, and being ruthlessly focused on performance and getting the most out of his team. He also talked about building a team of local entrepreneurs, not a group of remote top-down oriented executives. You can tell that he probably sleeps like 2 hours a night – I’m not sure his brain would shut down for longer than that. He is the classic entrepreneur – he is living his company, every single day, every single minute. Listening to your users, delivering them a local product and executing with laser focus – this is what I got out of Jack. Bottom line: rock star.

5. Jeff Bezos – CEO, Amazon.com

So Jeff built upon his colleague’s earlier comments in the AWS workshop during the General Session. So what’s really going on here? Is Amazon a retailer? Is it an infrastructure provider? I think what Jeff is really doing here is building and leveraging a platform that bridges the bricks-and-mortar world with the cyberworld. Look, Google is a platform. Yahoo! Is a platform. Microsoft is a platform. I think there are going to be a small group of platforms that dominate the landscape, surrounded and augmented by an array of specific applications that stitch people and things together. If Amazon doesn’t go this route, it will be relegated to a virtual application, someday dependent upon someone elses (Google’s?) platform. And this just won’t cut it. Jeff has been at it for 11 years, has built a $10 billion retailing colossus and insists on being a core part of the ongoing conversation and convergence between the online and offline worlds. To me AWS is the tool that ensures Amazon will be one of the platforms on which Web 3.0 is built and operated. Nice job, Jeff.

6. Hyun-Oh Yoo – CEO, Cyworld

I knew Cyworld was successful but I had no idea exactly how successful. While I can’t pull the statistics out of the sky (I’m sure Mary Meeker has them, though) his billions of page views a month, something like 160 million songs downloaded a month and other crazy traffic numbers just drove home the point – this guy understands his market and his users’ utility functions better than anyone I’ve ever seen. Cyworld is a platform – his users live on the site. Is it MySpace? iTunes? Flickr? Oddcast? No, it’s all that and more. It was so crazy I still can’t get my mind around what a rich experience he is providing his users – and they obviously love it. It is a platform, bringing together a constellation of applications that enable users to customize their experience. It will be fascinating to see how the Cyworld experience translates to other markets. If Jack Ma is any indicator, it will be hard to replicate the success they’ve enjoyed in their home market. That said, I’m not betting against them. Mr. Yoo is one smart dude.

7. Marc Benioff – CEO, Salesforce.com

Another rock star. Marc’s talk and demo of a variety of mash-ups around Salesforce.com and its AppExchange was mind-boggling. I used to think AppExchange was a cute little sidelight – I was wrong. This thing is pure power. In a way it reminded me of Bezos and AWS; this is clearly a platform play. Salesforce.com has unbelievable data and an fairly inexpensive, flexible platform for people to just go nuts. Easy APIs for people to design neat applications around the AppExchange platform. Are you seeing a theme, here? Platform, platform, platform.

8. Ross Levinsohn – Fox Interactive Media

What I got from Ross was very simple: there will always be people who think you are a jackass, but the bottom line is do your homework, do it well, execute your strategy and see who the jackass really is in the end. For example, he was criticized for spending $580 million for MySpace (among other things), and now he is a genius in the wake of Google’s external validation of the value inherent in the MySpace platform. He and his team looked at the asset, valued the asset based upon how FIM could leverage and enhance the MySpace platform, and paid a price that envisioned an attractive return on its investment. Needless to say, it has likely worked out far better than he and Rupert could have imagined, but it was a business deal and they did it right. Focus on the value drivers, block out the noise and execute. Good job, man.

9. Brad Garlinghouse and Ethan Diamond – Yahoo!

Another neat display from Yahoo!. So these guys showed the new Yahoo! Mail application which embeds chat into email. I thought the demo totally rocked, adds real value to the email experience and I am looking forward to checking it out. Again, while I am certainly not the litmus test for what will succeed in consumer-based media, this strikes me as another indicator of Yahoo!’s pluckiness and intense focus on and understanding and delivering value to their customer base.

So What are the Key Take-aways?

So here is my bottom-line after distilling the input of all these successful people over a frenetic 48 hours:

Platforms rule – Web 2.0 dominance is about creating platforms where people can live. Really good ideas – features, products, applications – will be integrated within or accessible by these core platforms. But at the end of the day, it is the platform owners that will house the communities. But with data transportability, barriers to shifting platforms will eventually drop to zero. This will require platform providers to stay very close to their communities, or risk being jettisoned for a more robust, more responsive platform. Are the current true platform owners Google, Microsoft, Yahoo!, Amazon and EBay? What about the Cyworlds and the MySpaces of the world? What do you call them? Can others achieve platform status? Beats me. I’m not smart enough to know.

Winners listen – Every single big winner that presented talked about listening, being close to the user and really getting inside their heads to create the best user experience possible. There was a startling lack of arrogance by even the most successful companies when discussing their platforms and strategies. There is immense humility out there, probably because the best companies are deeply paranoid about losing their edge, which in the wired world can cause a company’s prospects to reverse practically overnight.

It’s all about the people – Recruiting is getting harder every day as the competition for top talent intensifies. It doesn’t matter – just work that much harder to find the best people to drive your business. The best managers of the best companies are obsessed about recruitment. You should be, too.

Conclusion

I realize just how green I am when in the presence of 1,200 people who are working to change the world. I am looking forward to the day when I can walk into the Web 2.0 Summit or another top industry gathering and feel like I can truly hang with the crowd. For now, I am still a citizen of Mars, but have applied for citizenship on Venus. I guess I’m kind of in the green card process. I’ve got some time to wait, some seasoning to acquire. Then I need to study for the test. It takes time. Web 2.0 was a truly eye-opening experience for me. Thanks John and Tim. You've helped me see that I’ve got a lot of work to do!