Google Takes Stricter Approach to Costs →

Alastair Barr on why Google is planning more stricter cost cutting over the next few quarters:

Google revenue grew 19% in 2014, down from 21% in 2013, 22% in 2012 and 29% in 2011. But operating expenses grew 31% last year, according to S&P Capital IQ; spending on research and development soared 38%.The result: operating-profit margin declined to 32%, from 38% in 2011, according to Goldman Sachs.

The company has matured and still relies on a single product for the overwhelming majority of its revenue. In contrast Apple has managed to deversify much of it’s revenue – even though much of its growth is still tied to iPhone.

Initiatives like Google Glass, Project Loon, Google Fiber, robotics and self driving cars are clearly the future. With that said, the fact that they are far from being able to monetize them plus the sheer amount of these moonshot type project makes them look unfocused. Pressure from investors was bound to happen as growth has started to slide.

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Wearables

I’ve been using the Apple Watch for the past few weeks. Before that, I hadn’t worn anything on my wrists in over 15 years. Although I don’t quite understand the implications of wearables yet, I know there’s something there. The obvious use case is small, micro-interactions through notifications like a message from my wife saying she’s on her way, and being able to acknowledge that with just one tap. Being able to check my flight status or upcoming meetings is cool and pretty useful too, but I don’t think that’s how wearables are really going to impact our lives. 

Wearables represent the first step of a revolution that gets us closer to being hyper informed, not only on what’s happening in our digital world but more importantly, what’s happening in the physical world. How we interact with both will change thanks to readily available wearables and increasingly connected devices around us. 

As Ben Thompson wrote a few months back:

To fully interact with this sort of software-enabled environment, I will of course need some way to identify myself; for all the benefits of the human body, projecting a unique digital signature is not one of them. The smartphone clearly works, but it’s not perfect: the more you need it for interacting with your environment, the more noticeable is the small annoyance of retrieving it from your pocket or handbag.

 A wearable is different, particularly if it’s on your wrist: simply raising your arm is trivial. This makes it much more likely you will actually interact in a meaningful way with software-enabled objects around you, which makes even having said objects much more likely. To put it another way, I don’t think it’s an accident that the two hot new technologies are wearables and the Internet of Things; they are related such that each is made better by the other.

Being able to pay without pulling out my wallet, or the option to scan my boarding pass with a watch, is only the beginning of the bridge between us and the physical world around us. Many of these things were possible via smartphones but we can now accomplish them without going out of our way. To some extent, we are seeing the first steps of a warable revolution, similar but more impactful than the smartphone one. Using technology to augment oneself with the world won’t be confined to people’s phone. This means that we now have an opportunity to create completely new applications to solve inefficiencies that weren’t possible before. 

In hindsight, Apple and Google have been laying the groundwork over the past few years with technology such as iBeacons (built on top of something as widespread as Bluetooth), indoor mapping, personal identity, Apple Pay and the Internet of Things. When you bring these together, the possibilities for personalized physical interactions on a massive scale are endless. 

Brands should take note. If smartphones are able to alter consumer behavior buried in our pockets, then wearables will accomplish even more. I wrote more on this in the Koombea blog.

Don’t scratch too hard

As kids, we’re told not to scratch if it itches, since it will just make it worse. As entrepreneurs searching for problems to solve, we’re told the exact opposite. We could build better products by solving our own pains, since we’ll know the problem better than anyone. Paul Graham calls this organic ideas. Besides, how convenient would it be to be your own target market.

In plain sight, this strategy seems to be what worked for several companies whose founders merely wanted to solve an annoyance they had. It’s easy to assume that, that’s all they did to validate their idea, but it’s probably not the full story. Hence, many people use this thought process to skip what could be considered uncomfortable and redundant: talking to others about their problems, and making sure that they are feeling the same pain points you do.

People that build stuff aren’t “normal”, because they’re usually power users. Whatever solution is in the market for a particular problem is probably not good enough for us, for any number of reasons. So, we revert to going out of our way and building a new product outright, in the hopes that other people will find it valuable like we did. Why wouldn’t they, right?

Here’s where things go sideways: by not validating properly, we end up building a more complex product than what people actually need. More importantly, we’re blind to see the workarounds which people use to cope with the problem we’re solving. Most of the time, their workaround is good enough for them not to need our super sleek, elegant app.

While doing potential customer interviews, it’s important to find out if the problem is important enough to get people excited by a brand new solution. If your results are ambiguous, or they don’t really care, either way, you’re probably not hitting the right notes. When this happens, stop! It’s a slippery slope from there.

I’ve fallen into this trap before, and, without realizing it, I’ve been blinded by the lure of finding the best solution possible, when, in reality, nobody cares about it at all. It’s hard to escape this habit, but, it’s one we’ll need to drop in order to build products that can grow considerably. Simple apps should be easy to use, but, more importantly, your users should be able to explain what it does to others without much difficulty.

There are dozens of examples of power users that have created simple, yet powerful products that have had massive adoption.

Consumer Grade

Historically, enterprise software buying has occurred in silos ruled by IT overlords. IT commanded what computers, smartphones, and software you had to use. In most places, this is still the case, but, the fact that most employees use their personal devices,(tablets and smartphones) at work, means that they’ll have a say in what they are willing to install. If apps aren’t up to people’s standards, they won’t be used as much and the ROI for these big purchases will never be recouped.

“Enterprise grade” used to mean something for corporate IT buyers, who get warm fuzzy feelings from buying software built with security, traceability, and compatibility in mind. As the old saying goes: “Nobody got fired for buying IBM”. First and foremost, IT buyers are buying peace of mind since it’s their job that’s on the line, thus, they have set a pretty strict feature which the vendors must comply with.

As the so called “enterprise features” become standard for most SaaS products, the battle for IT mind share will move elsewhere. It could be argued that, corporate buyers will increasingly evaluate products based on their overall UI/UX and mobile capabilities. Companies like Box, Jive and RelateIQ have a pretty good head start on this.

The BYOD trend will curve the demand towards better and more usable software in the enterprise. People have seen the difference of what great software can do, and more will want to get better and easier tools to use at work, just like what they have at home.

“Consumer-Grade” software will take on a new meaning. This is the intersection where IT gets their feature checklist (to cover their butts), and end users work the way they like: with easy to use, beautifully designed, web, mobile, and tablet applications that work. This is not a trade-off, where we’re sacrificing “power” features for usability. It’s basically the result of rising incumbents in the enterprise software space finding their competitive edge, by embracing what’s already standard in consumer products. The 800 lb. gorillas will have to adapt, or they will become obsolete very fast.

Aspiring entrepreneurs have an incredible opportunity to take advantage of this shift in buying behaviors, and disrupt companies that lack innovation in these key areas. As more enterprises go SaaS, they’ll look towards changing some of their legacy vendors with new, mobile, and consumer friendly offerings. As a result, startups have a once in a lifetime opportunity to do what big companies have a hard time doing: innovating.

Maybe There Really Will Only Be Five Computers…

Maybe There Really Will Only Be Five Computers…

Amazon may sell 3-5 million tablets in Q4: Forrester

Amazon may sell 3-5 million tablets in Q4: Forrester

Evernote’s $50 Million in Funding Goal: Build a Hundred Year Company

Evernote’s $50 Million in Funding Goal: Build a Hundred Year Company

Why Android will gain HUGE tablet marketshare later this year

Why Android will gain HUGE tablet marketshare later this year