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Scott Rafer on Dalton's letter: "Learning the wrong lesson"

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Re: Scott Rafer on Dalton's letter: "Learning the wrong lesson"

#41

Post by klawed »

austenallred wrote: post #8
salman89 wrote: post #2

"The lesson instead is: build something whose very nature makes it a cannibalistic cash flow hit for a BigCo so that their shareholders resist competing, but which their users love." Can anyone explain more what he means by that? How can something that is a cash flow hit for a BigCo not be a cash flow hit for anyone else?

It means build something that big companies have thought about or maybe even could build, but have not built because they're afraid they'll lose money in doing so. Facebook and Instagram was a perfect example. Facebook has money, time, and resources to build an Instagram competitor. But they didn't, because they still don't know how to monetize their mobile traffic (which should answer the question, "Why is Facebook'…

One would think that Facebook will aggressively avoid finding themselves in a position where they have to spend $1b on a product they could build themselves. IOW, the next app that appears to be on a path to getting as much momemtum and traction that Instagram had will likely find FB competing much sooner. Who knows, maybe that's what was going on with Dalton...

Re: Scott Rafer on Dalton's letter: "Learning the wrong lesson"

#42

Post by jamesaguilar »

drivebyacct2 wrote: post #33
michaelbuckbee wrote: post #5

Earlier quoted context omitted.

An example: Rapportive was a browser plugin that put social information (from FB, LinkedIn, Twitter, etc.) directly in your Gmail. This was great from a user perspective (puts a picture with an email so you recognize that this is 'Bill' who you met at the hackerspace even though his email is cypherdog26@crytomesh.org). However it was NOT so great for Gmail: 1. Rapportive overwrote the section of gmail where they disp…

Except Gmail does that now via G+ data.

Which is not nearly as useful since the G+ network is not as important as LinkedIn or Facebook.

Re: Scott Rafer on Dalton's letter: "Learning the wrong lesson"

#43

Post by eurleif »

paulsutter wrote: post #16
slurgfest wrote: post #12

Earlier quoted context omitted.

IE's inclusion in Windows (which dominated the market) had a lot to do with Microsoft crushing Netscape - it wasn't just that IE was free and Netscape wasn't.

Free seemed to work fine for Chrome and Firefox. The real key here is that corporations stopped paying for Netscspe, which was their main revenue stream. Microsoft definitely got a big advantage from bundling the browser, but how can it make sense in an Internet era for an OS to ship without a browser? How could it possibly benefit consumers if they were forced to download a browser separately? Nobody is screaming an…

>Free seemed to work fine for Chrome and Firefox.

Downloading Netscape back in the day wasn't the same as downloading Chrome or Firefox today. We're talking about 1997-8, when most people had 56k modems at best.

Re: Scott Rafer on Dalton's letter: "Learning the wrong lesson"

#44

Post by austenallred »

klawed wrote: post #41
austenallred wrote: post #8

Earlier quoted context omitted.

It means build something that big companies have thought about or maybe even could build, but have not built because they're afraid they'll lose money in doing so. Facebook and Instagram was a perfect example. Facebook has money, time, and resources to build an Instagram competitor. But they didn't, because they still don't know how to monetize their mobile traffic (which should answer the question, "Why is Facebook'…

One would think that Facebook will aggressively avoid finding themselves in a position where they have to spend $1b on a product they could build themselves. IOW, the next app that appears to be on a path to getting as much momemtum and traction that Instagram had will likely find FB competing much sooner. Who knows, maybe that's what was going on with Dalton...

Possibly. The difference with Instagram is that Instagram didn't have to rely on Facebook as a platform, where as it sounds like Dalton did. Hence the Dalton frustration; Facebook has total control, and Dalton has no recourse to do anything about it, yet they encouraged him to keep building.

Re: Scott Rafer on Dalton's letter: "Learning the wrong lesson"

#45

Post by scottrafer »

klawed wrote: post #41
austenallred wrote: post #8

Earlier quoted context omitted.

It means build something that big companies have thought about or maybe even could build, but have not built because they're afraid they'll lose money in doing so. Facebook and Instagram was a perfect example. Facebook has money, time, and resources to build an Instagram competitor. But they didn't, because they still don't know how to monetize their mobile traffic (which should answer the question, "Why is Facebook'…

One would think that Facebook will aggressively avoid finding themselves in a position where they have to spend $1b on a product they could build themselves. IOW, the next app that appears to be on a path to getting as much momemtum and traction that Instagram had will likely find FB competing much sooner. Who knows, maybe that's what was going on with Dalton...

IMO $1B for that kind of risk-free traction isn't significantly expensive to FB. Especially as FB desperately needed a volume of photos available outside the social graph in order to stay competitive.

Re: Scott Rafer on Dalton's letter: "Learning the wrong lesson"

#46

Post by gojomo »

I think to understand @daltonc's strategy with join.app.net, one should be familiar with Thomas Schelling's concept of 'precommitment':

http://en.wikipedia.org/wiki/Precommitment

Note that the 'textbook' examples of precommitment involve the burning-of-bridges or burning-of-ships-at-the-shore.

If there's any hope of an alternative to Facebook/Twitter at this point, given the incumbents' long head-starts, it's going to be a 'zag' to the incumbents' advertising-supported 'zig'. Caldwell might not have gone into his Facebook meeting fully intending that sort of confrontation... but by the time he left, the choices were stark.

I thus view Caldwell's anecdote not as a complaint, "boo-hoo I was wronged", but as him sharing a difficult lesson: that Facebook's model makes it impossible for Facebook to be a magnanimous platform steward. Perhaps Caldwell should have seen the writing on the wall earlier, but many exterior-platform shops are missing the same point, as evidenced by the surprise and indignation after each new consolidating move by the platform proprietors.

Perhaps Caldwell could have intuited the reality beforehand, and written about it in abstract terms. The anecdote illustrates the problem, in a way that far more independent developers will understand.

Re: Scott Rafer on Dalton's letter: "Learning the wrong lesson"

#47

Post by scottrafer »

gojomo wrote: post #46

I think to understand @daltonc's strategy with join.app.net, one should be familiar with Thomas Schelling's concept of 'precommitment': http://en.wikipedia.org/wiki/Precommitment Note that the 'textbook' examples of precommitment involve the burning-of-bridges or burning-of-ships-at-the-shore. If there's any hope of an alternative to Facebook/Twitter at this point, given the incumbents' long head-starts, it's going t…

I fully understand breaking the rice pots and burning the boats, and I hope that you are right. However, his implementation doesn't create the developer education that you suggest. As they well should, young founders look up to guys like Dalton and may well take him at this word that Facebook's negotiating tactics are surprising. FB's stance on these issues are so ruthlessly consistent and well known that it's hard to even consider the specific tactics described as unethical.

I feel a responsibility to make it clear that such things are the norm and need to be accommodated in business planning and risk assessment from the beginning. Please note that I failed to do so the first time I dealt with Facebook, but that doesn't make it their fault -- rafer.net/post/168541483/lookeryupdate

Please also note, that I'd be damn excited for app.net's current iteration to take off and will go out of my way to use it if I can. I'd love a dev program that had ongoing stewardship built in, but no for-profit platform provider has ever made such a thing work over time.

Re: Scott Rafer on Dalton's letter: "Learning the wrong lesson"

#48

Post by petegrif »

scottrafer wrote: post #35
petegrif wrote: post #25

Earlier quoted context omitted.

There only is one sure strategy for avoiding the potential steamroller of the platform company. Don't build on the platform.

Like any other resource or dependency that you build into your business, using a platform requires an ROI calculation of some sort. The distribution advantage needs to be worth the risk.

True. The point however is to understand how to quantify the risk. The complicating factor in this case is surely the fact that he had received explicit assurances that his development was welcome and would be supported. The thing I don't understand is how you would go about assessing the 'distribution advantage' given the fact that the risk is evidently so hard to evaluate. DC has evidently now come to the conclusion that it is too risky for him no matter what the advantage. I am curious to better understand your thinking on how to weigh advantage against risk.

Re: Scott Rafer on Dalton's letter: "Learning the wrong lesson"

#49

Post by petegrif »

scottrafer wrote: post #47
gojomo wrote: post #46

I think to understand @daltonc's strategy with join.app.net, one should be familiar with Thomas Schelling's concept of 'precommitment': http://en.wikipedia.org/wiki/Precommitment Note that the 'textbook' examples of precommitment involve the burning-of-bridges or burning-of-ships-at-the-shore. If there's any hope of an alternative to Facebook/Twitter at this point, given the incumbents' long head-starts, it's going t…

I fully understand breaking the rice pots and burning the boats, and I hope that you are right. However, his implementation doesn't create the developer education that you suggest. As they well should, young founders look up to guys like Dalton and may well take him at this word that Facebook's negotiating tactics are surprising. FB's stance on these issues are so ruthlessly consistent and well known that it's hard t…

I don't think that the key message is that FB's negotiating tactics are surprising. Whilst he was certainly surprised the point is surely that he was shocked because their behavior at the meeting was so at variance with what he had previously been led to believe. You say that FB's tactics are 'ruthlessly consistent' and 'well known' but this is surely a simplification. For example, the FB platform supports games but I am not aware of any instances in which FB has muscled in on a games dev.

I agree that it is helpful to point out that there are major risks when you develop for an alleged platform. But isn't that the point of his post?

I think the point of the app.net initiative is to create a platform that because of its different business model (subscription for infrastructure/service) will not suffer the conflicts that are inevitable when the business model is ads. And whilst this is indeed unusual lately, it is not long ago that such for-profit platforms were the norm. Older examples include, DOS, Windows, UNIX, Linux, X-Windows... More recently there is a profusion of companies providing commercial support for open source software or providing such software as a service.

Re: Scott Rafer on Dalton's letter: "Learning the wrong lesson"

#50

Post by scottrafer »

petegrif wrote: post #49
scottrafer wrote: post #47

Earlier quoted context omitted.

I fully understand breaking the rice pots and burning the boats, and I hope that you are right. However, his implementation doesn't create the developer education that you suggest. As they well should, young founders look up to guys like Dalton and may well take him at this word that Facebook's negotiating tactics are surprising. FB's stance on these issues are so ruthlessly consistent and well known that it's hard t…

I don't think that the key message is that FB's negotiating tactics are surprising. Whilst he was certainly surprised the point is surely that he was shocked because their behavior at the meeting was so at variance with what he had previously been led to believe. You say that FB's tactics are 'ruthlessly consistent' and 'well known' but this is surely a simplification. For example, the FB platform supports games but…

Facebook has muscled in on literally everything but games, other than their ex poste facto 30% revenue share, and during their earnings report they intimated that they may get into games directly.

And, I'm shocked at your statement about the older platforms. I don't know if your entire background is on your LinkedIn page, but what you say is simply not true of Windows, DOS, the Mac, and is very tough to credit to Sun or SGI in their heydays. Those vendors cherry picked their ISVs all the time and with no more rhetorical consistency, stewardship, or charity than Dalton describes. They did so because they had market share in their segments and could.

That's why I specifically included this in my post: Playing naive to that reality went out the window in the mid-1980s with PC software and has been reproven by the platforms at least every 24 months since.

Everyone from RedHat to BeOS to Sega who behaved (somewhat) better did so because they needed their ecologies to grow. If they'd succeeded in building market share, I'm pretty sure I could predict their changes in policy.

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