The Good News For Innovation: Google Went Public

So there has been a lot of talk about Google becoming the new Microsoft and how Google is suffocating innovation by carelessly stomping on emerging markets. Now I see eBay has decided pay-per-click ads on its sites.

So what’s the good news for innovation about Google going public? Just like eBay’s, Google’s investors are going to realize how much money Google is leaving on the table – and they are not going to be happy. Think about it… I’ve never clicked an ad from within my Gmail account. If they’re selling impression based ads (and I bet they are), then they make some money on my account IF I am a very active user. I’ll bet they don’t make $5 a month though, or even close for that matter.

So as Google moves into other applications, they are going to find there is far less revenue in running ad-sense ads. Why? I don’t know about you, but I am in my email all day long. No other application even comes close in terms of my attention or usage.

So… Let’s apply Google’s strategy to other applications – ones that are less commoditized than email, but the perceived value is higher. In those scenarios a user might generate $5-$10/YEAR in Ad-sense revenue – and active user that is. But because the perceived value added by the application is higher, that same user would be willing to spend $15/MONTH for the service.

Clearly, they will be leaving heaps of money on the table. Wall Street will tighten the vice. Paid services are inevitable atGoogle…especially when they enter the business space where many organizations want to pay the services they consume.

Have You Seen This Before?

As posted on the FreshBooks Blog:

I’m about to coin a phrase, or make a fool of myself by describing a concept that has been around for ages. Hold on to your hats, here come my thoughts on “transitional services”.

Transitional Services are services that help facilitate a user’s transition from one platform to the next – or at the least, ease their pain.

Whenever there is a platform shift, there is transition, and straddling. For example, for the past ten years the photography industry has been shifting from celluloid to digital. The industry and its consumers are undergoing a transition from one platform to another. This transition has consequences. Many users are reluctant to transition because they are invested in the first platform (i.e. “I have cameras and film, slide projectors and photo albums”). Once the decision to transition has been made, users may want to bring their old platform content (think printed photos) with them to the new platform format (think scanning photos) and they find themselves at a point where they are straddling the new platform and the old. Both the transition and the straddling phases create pain and opportunity in the marketplace.

With me so far?

I wrote Paul Kedrosky a note saying I think there is a huge and growing market for transitional services in the Web 2.0. I pointed out how helping people get from offline processes to online processes – while helping to ease the pain of the straddling phase – will be a strategy that start-ups and established players can leverage and that I foresee an increasing number doing so in the coming years.

This whole conversation was sparked by FreshBooks recent release of its transitional ground mail service. The solution FreshBooks is selling is to help business transition their invoicing/receivables process online where significant benefits can be realized (streamlined processes, reduce costs, and improved customer relations). Businesses want to get online, but there is a world of pain awaiting them in the transition phase (“How do we build the service we need?”) and straddling phases (“How do we manage our cash flow when half our clients pay us online and half pay us offline?”)

That ability to gradually transition customers from ground mail invoices to online invoices and recurring billing is what FreshBooks offers, but there are other examples of businesses that help facilitate traditional office activities. You can create and send photo albums as gifts via Flickr. This is an example of a reverse transitional service where Flickr is facilitating a transition from the new platform (digital images) to the old (printing and mailing images).

What’s magical about all of this, and a hallmark of a transitional service in the Web 2.0, is how the line between the online world and the offline world blurs. The slicker the service, the more seamless the delivery, the more the offline world gets pulled online.

In terms of opportunities, I foresee more and more services leveraging transitional strategies and delivering transitional services as backend services and incremental revenue generators.

So, while none of these concepts is new, and the act of delivering such services has been around for some time, I have seen no attempts to define the phenomenon, so I have done it here. If this has already been done elsewhere, please let me know. As I have not had the time to consider the implications of transitional strategies as much as I would like, I encourage you to sound off with your own thoughts. Can you think or other examples? Better yet, can you think of industries in need of transitional services, where ripe opportunities exist? Please comment below.

What's the Big Deal?

We released our ground mail service today. Someone bought 100 stamps within the first 90 seconds. That’s a nice validation.

The real story with our release today is this: countless businesses that are STUCK in the old/offline world and trying to get to the web so they can leverage the benefits of the internet (cost savings, streamlined processes, improved client relations). Not many services are really assisting them with the transition, nor are many Web 2.0 services helping to facilitate traditional offline activities (Flickr offering to print and send photo albums is a nice example of someone who is doing this). I think there is a huge market and a huge need for services that help bridge this gap and do not simply turn their back on those users that need some aspect of their experience to be an offline experience.

Our ground mail offering is a nice example of where things are heading, and how companies like FreshBooks are empowering individuals and small businesses with tools that those individuals and small businesses could not otherwise afford to possess…more services will do similar things in the coming months and years, and I am delighted about this fact. That’s the big deal.

Marshall TechCrunched us here:

Measure The Success of Your Web Application

One of the reasons I love web apps – and internet marketing in general – is that you can track everything. Gone are the days that you pay for a TV spot and *hope* it does something. The internet has brought a new paradigm of measurement for all things marketing and product use related.

It’s been a goal of mine to share my knowledge about running web applications so that others can be successful in building and growing their web services. In this vein I wrote a feature for that explains how you can measure the success of you web application. If you have any marketing background, the principles behind this piece will be old news to you. But I’d like to think there is some value in there for anyone, especially first time entrepreneurs who are building a web app. Check it out.

On a side note, at the time of writing this post I noticed there are no comments on the article. It only went live about four hours ago, but the thinkvitamin readers usually get their articles by RSS and are frequent commenters on articles (there are some on Digg here). For example, I have already received an offer to share application funnel data because I included this call to action at the end:

Shout out to those of you who run web services: I’d love to know how your conversion funnel is doing so that I can aggregate some data and share it with entrepreneurs who are trying to get started. Shoot me an email if you would like to participate. Thanks.”

What is interesting about that is I put no call to action for comments in my article. It’s my mistake and something I will learn from. As a rule of thumb, in any piece you write for a publication where comments are enabled, it’s a good idea to *ask* for comments, especially in this world where journalism is a conversation and your readers often have at least as much knowledge as you.