Over the last few months, I’ve been meeting with a lot of folks working in ecommerce at major retail brands in North America. There’s been a ton of interest in the Shopping Index reporting my team at Demandware has been working on, particularly as everyone begins their holiday campaign planning. The Index is a project to apply analytics reporting to the incredible amount of ecommerce data that flows across the 1,300+ retail sites on the Demandware platform – you can read more about it here.
Since I joined Demandware, I’ve been struck by the many similarities between the digital analytics and ecommerce platform markets. These are both fast-developing markets whose clients – small, mid-sized and large companies, mostly B2C but also B2B – are seeing most of their new growth, if not all of it, in digital rather than brick-and-mortar. As a result, these companies are racing to adopt new technology to support that growth, which often leads to painful and awkward change in their organizations.
I’ve noticed that, over and over, when I’ve been talking with ecommerce teams, the conversation begins squarely in ecommerce and gradually drifts towards… something else. Part marketing, part commerce, part customer experience, part “digital intelligence,” if you want to call it that. Ecommerce folks are constantly referring back to topics I used to talk about while at Coremetrics – contextual marketing, using data to inform merchandising, leveraging browsing and search data, and so on.
For someone whose tech career has been built in the technology of how people buy and shop online, this convergence is… interesting. And it has given me some clues about where the industry is headed, probably sooner than we think.
Today, Oracle announced its acquisition of Maxymiser. You can read the press release here.
This is the 7th acquisition by Oracle for its “Oracle Marketing Cloud.” (Check out my running tally of Marketing Tech acquisitions.) While not Oracle’s largest by a wide margin, I think this acquisition actually says a lot – both about Oracle, and the direction for the “MarTech” field as a whole. I have another blog post brewing on that topic….
Broadly, though, relevancy is becoming the new table stakes across a broad swath of industries. Retail, as usual, leads the pack. Maxymiser gives Oracle a whole new set of capabilities around optimizing user experiences that Eloqua and Responsys didn’t, and as Oracle looks to challenge Adobe and the others in that lucrative market, building out their strength in this area was a must. In that way, you could see this acquisition as the keystone of their marketing technology strategy – Oracle can now offer cross-channel delivery of promotions, products, and content, and the optimization thereof, by use of a very high-quality and market-tested solution in Maxymiser.
I would guess that Oracle, as usual, outbid a small number of other suitors for Maxymiser. I have a pretty good idea of who those suitors might’ve been (though no privileged information there), but you can figure it out with a quick Ghostery check. Per usual, Oracle’s extended ROI timeline – if they are even held to an ROI timeline! – probably allowed them to offer a better deal.
My next post, which I’ve been cooking for a while, is going to deal with what I see as the endgame for MarTech. It’s coming. And probably sooner than we think. More soon.
If you follow tech twitter long enough, here are a few things you will learn:
- How expensive housing in the SF Bay Area is
- What Blue Bottle coffee is (actually, you will want to go try this)
- There are all these on-demand services that sound kind of cool but probably aren’t available where you live (outside of a few major metros)
- There are certain political red lines in tech that you must not cross publicly or you are a terrible human being
- Seriously, the housing in SF is a nightmare
Just as it is Silicon Valley-centric, the tech twittersphere is also extremely startup-centric. In a lot of ways, this is really cool: you get the sense of seeing the first contours of the future as they’re being built. On the other hand, I’ve found that the mainstream tech commentariat has remarkably little of value to say about management in large companies. The VC/startup industrial complex glorifies practices that are kind of cute or interesting but totally impractical for any organization of appreciable size: transparent salaries, “flat” organizations, a focus on user experience as the acme of product strategy, constant rotation of job duties in the company, and so on.
This reflects a lack of appreciation for the legitimate struggles of traditional industries, particularly big companies in them, to adapt to technological change.
I thought I would give an update on a little side project I’ve been working on lately.
I scrupulously avoid talking politics here, but I’ll make an exception here to describe my project.
Some friends of mine are starting a small business soon. It’s a really cool idea, and I plan to help out with it as I can. As we talked about it on a hike this morning, it occurred to me that a lot of key factors that make the venture viable would not really have been possible until very recently. By taking advantage of free or very low-cost technology services (primarily in regards to distribution, marketing and commerce), they will be able to bring this awesome new product to market. Who knows where it could go?
I’ve actually been thinking a lot about infrastructure lately. Public infrastructure, as one example, has always been a hobby horse interest of mine. We have tragically under-invested in public infrastructure here in the U.S. over the last few decades, which is directly harming our national competitiveness and economic growth even as borrowing costs are at historic lows… but others have written much more eloquently than I can about the importance and challenges of public investment in roads, bridges, ports, telecommunications, etc., so I won’t go into that here.
Infrastructure socializes costs and allows users to privatize most of its benefits (minus obvious costs in the form of taxes). In this way, much infrastructure is inherently more valuable to smaller constituents than big ones. If you could afford to build your own road to bring goods to market, then a public road is still a useful option as a cost-savings measure, but maybe not a must-have; but if you’re a small producer, then a public road is likely the difference between bothering to produce (or invest) in the first place or not. Good infrastructure makes critical steps in value creation easier and cheaper.
I have seen numerous performance evaluation systems throughout my career. Few, if any, of them have struck me as very effective. Most seemed to lack basic fairness or a meaningful connection to anything outside of the evaluation system itself. More often than not, they were motions we went through because someone said we were supposed to.
Old school #measure
In business school, you learn that the way most companies do performance evals is completely bonkers. There are many reasons why. A big one is that most humans just aren’t very good at evaluating others’ performance, particularly on intangible tasks (which, of course, defines many knowledge workers’ jobs). It also turns out that most people are extremely uncomfortable evaluating others at all – let alone in person, and least of all for people with whom they frequently interact. Psychology research is legion with repeatable examples of how tiny, random environmental influences – “priming” – can dramatically change people’s perceptions and moods. (Protip: have an annual review coming up? Arrange it somewhere bright and yellow.) Humans simply cannot escape our psychology, which makes us notoriously unreliable.
Yet despite all this, performance evaluations exist, as they should. Some employees do contribute more than others. Companies need a way to identify and reward top performers and help lower-performing ones improve (or leave). Inevitably, compensation and promotions are involved as well, making fine distinctions about who contributes what, and how much, highly desirable. And of course, you can’t forget the role performance evaluations have as legal CYA when it comes to disgruntled employees.
Figuring out how to accurately measure, forecast and improve employee performance in a complex organization is incredibly difficult. Virtually no one has solved it – certainly not me. Yet drawing the right conclusions about performance is the difference between rationally managing your company’s precious resources, versus relying on emotional whim and political wrangling.
You can always count on the New York Times to sell eyeballs with Serious Opinions about the chattering class’s moral panic of the day. True to form, they published a red meat op/ed today on how internet platforms like Facebook, Google, Instagram and Twitter are diabolically making money with their users’ data, thereby corrupting democracy and otherwise destroying the world. Instead, says UNC’s Zeynep Tufekci, “Internet sites” should all build direct subscription options for their users that would allow them to opt out of “tracking,” enable encryption and be treated as a customer, not just a “user.”
This idea is completely unworkable. But understanding why requires you to understand what Facebook – and other social platforms – really are, and what they aren’t.
Reddit is sort of the weird little sibling of the social web. Founded by two University of Virginia alums (wahoo-wa!) in the same two or three year span that gave the world Facebook, LinkedIn and Twitter, reddit (first letter is properly uncapitalized) has achieved both notoriety and semi-cultish status among the young and techie crowd, but has struggled to gain mainstream adoption. It has also been mostly a failure financially – the company has never been profitable.
Reddit faces some huge problems that will threaten its continued relevance as a major social platform very soon. The biggest issue is not, in fact, that the company doesn’t make enough money. The company’s shareholders don’t really seem to care about that anyway (though if they’re waiting for reddit to become a fount of profitable growth, they seem to have buddha-like patience). Rather, what threatens reddit more than anything is its lack of innovation in the user interface and format of the site, its poor leadership, and how it pursues its mission. Though at some point, they also have to figure out how to eventually make more money than they spend.
In short, the era of being the web’s cutest niche message board site is over. Reddit needs to grow up.
Where else can you buy embroidered Lady Gaga toilet paper?
Etsy IPOed this week to much well-deserved fanfare. Their original share price of $16 doubled in value almost immediately after going on the market, valuing the company of about 700 employees at over $3 billion. This was probably, in part, a calculated move – though it may have also been an indirect result of capping retail investors’ stock access to $2,500 apiece, in an effort to increase the number of subscribers. Whatever it was, it speaks to the tremendous value the market sees in Etsy’s unique two-sided marketplace business model for people to find “authentic,” hand-crafted goods from individual “makers.”
One of the most interesting aspects of Etsy’s emergence to me is its identity as a newly public “B-Corp.” In case you’re not familiar with the concept, B-Corps are companies that have chosen to undergo certification by the nonprofit organization B-Lab for adherence to a list of environmental and social accountability measures. Etsy is only the second B-Corp ever to go public, and by far the most important (the first was a tiny Canadian vertical farming company in Vancouver).
Etsy’s mission-driven identity, however, is going to be fundamentally challenged as a public company. While I love many of the ideas behind the B-Corp certification – and Etsy itself – I’m pretty skeptical as to how they truly affect policy at a public technology company. The social and environmental policies it supports might, in the end, be mostly a marketing effort that are at odds with the growth opportunities Etsy now faces. Here’s why.
I’ve been thinking a lot lately about the consumer banking industry.
Consumer banking remains the single biggest operating segment for big American banks like Bank of America, Wells Fargo and Citigroup in terms of both revenue and net income. Generally speaking, other operating segments like investment services, brokerages, wealth management or real estate services come no where close. Yet in myriad ways, these mainstays of consumer banking are being eroded – both by financial services-focused disruptors and by those from outside the industry.
As I discussed in my newsletter last week, the rise of “FinTech” firms is already having a significant impact on the wealth management market. Wealthfront, just as one example, recently announced that it now has $2 billion in assets under management – all in just a little over three years in business. The actively managed mutual fund market is now grappling with how to answer automated services like theirs in a way that preserves their operating margins – and finding that that answer isn’t yet clear.
I think that Wealthfront’s challenge to the mutual fund market is a great example of what’s about to happen in consumer banking. The changes coming to how people will keep and manage their money will have major consequences for the banking industry, obviously, but also for the merchants that consumers do business with. Fortunately, merchants and consumers could be the big winners in the democratization of banking.