“Alexa, How Does One Get Unfair Ecosystem Advantage?”
Sometime around 2007 or 2008, michael lazerow arrived in the offices of BzzAgent. At the time, BzzAgent was the tip of the spear for revolutionary consumer marketing, generating millions of word-of-mouth impressions every year for the world’s renowned brands. Meanwhile, social media was on the rise: LinkedIn was re-imagining the resume, YouTube was delivering on the video revolution, the novelty of 140 characters made Twitter explode and — in what now seems obvious — Facebook was just surpassing Myspace as the go-to place for social connectivity.
Lazerow had scheduled a meeting with our President, Dave Dugan, and they spent some time chatting. In a hallway outside the conference room, Dugan approached me,
“Hey, you wanna meet this guy who has built an app for brands on Facebook,” Dugan asked.
“Aren’t most apps on Facebook designed for games? Does he have any traction?” I recall responding.
“Not that I can tell, but he’d really like to meet with you.”
From afar, I made eye contact with Lazerow through the conference room window as he waved at me. “Tell him I’m too busy,” I said to Dugan, and walked away.
I remember that day well — not just because of my insane hubris for not at least saying hello — but because it wasn’t long before Lazerow’s company, Buddy Media, was eating BzzAgent’s lunch.
Four months ago — way way back, in startup time — Mylestone launched its first native mobile app with a considerate amount of trepidation. We’d spent the better part of a year working on a web-based platform, but nothing had moved beyond minimum viable product. A native app provided a number of opportunities — and a whole mess of challenges.
Our app did it’s darnedest best to make an impact, but every day it was like pushing a giant boulder up an endless hill…made of crushed stone and pea gravel…with 30 MPH headwinds.
We kept turning the screws and tweaking the knobs on our native app; we talked to users and honed in on their needs; we killed sacred cows, made meaningful pivots — but the outputs were incremental at best.
It wasn’t that we didn’t believe in what we were doing. It wasn’t that users didn’t have a problem we could solve. It wasn’t that our product wasn’t great.
It was that the mobile ecosystem had already fully matured.
And developing any new product in a mature ecosystem greatly reduces the benefits of an “Unfair Ecosystem Advantage”.
Unfair Ecosystem Advantage has been the instrument of value creation for umpteen companies you know by name. Think Zynga, which revolutionized gaming in 2009, by arbitraging discounted spend on Facebook to obtain users for its Farmville game. Or What’sApp which now boasts 1.2 billion users and WeChat, which sent 46 billion digital red packets over lunar New Year, which both grew by offering unlimited free group texting on mobile devices.
Here’s the formula for Unfair Ecosystem Advantage:
(a) the scale of a new and wildly growing Ecosystem
An environment that is large but fledgling, and adding users at a breakneck pace: Facebook and smartphones both had wild periods of scale in their formative years.
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(b) a desired (often very good) Product
Something that consumers in the Ecosystem will want: Buddy Media’s Brand Page Management and Farmville for Facebook; What’s App and WeChat for smartphones.
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(c) a Service that benefits the Ecosystem Provider
Structured to augment the Ecosystems own growth and value creation: Facebook wanted more brands using their brand pages and made money every time someone clicked a Farmville ad; What’s App and WeChat made users want to buy smartphones faster and faster.
Turns out Unfair Ecosystem Advantage works — and Lazerow is one smart cat. The guy built a brand app on Facebook just before Facebook launched brand pages. These pages were intended to help the largest companies in the world create effective exposure on Facebook — and yet, no one really knew how to use them. Lazerow quickly transitioned his app into a platform to manage those brand pages, and in doing so created an unstoppable business.
Facebook — as we all now know — grew like a weed, and with it so did brand pages. And with that, so did the one guy who spoke the language of those pages: Mr. Michael Lazerow and Buddy Media. Turns out that bet was worth some $745M which Salesforce ponied up in 2012.
Back at Mylestone we had plenty of cash, and a bucket full of gumption, but constant feature and design improvements were unable to substantially change our user growth or activity levels.
We were like a tire that had picked up a nail on it’s travels: every day we were just a tiny bit more deflated.
Meanwhile — and completely unrelated — a few members of our team had recently purchased an Amazon Echo or Google Home. In hallway (read: Slack) chatter, we debated which product was better and which skills/apps were valuable. Most usage was of the utilitarian sort: A timer for cooking in the kitchen, ambient noises for sleeping, adding items to shopping lists.
Here’s what was most puzzling: For the past 5 years asking Siri a question had always felt like an action reserved for those trying to prove a point. But sometime in 2016, saying, “Alexa…” or “Hey Google…” became acceptable, almost customary. Talking to your device wasn’t reserved for dweebs or noobs or point-provers; it had crossed the chasm.
We started studying what was happening and were blown away. More than 5% of US Households already had an Amazon Echo (Alexa) device. A majority of Echo owners kept theirs in their kitchen, the central gathering place of the home. Skills on the Amazon platform grew more than 500% in the second half of 2016 alone.
It was still clearly very early days: There wasn’t yet a commerce component for any Amazon skill (think paid apps for iOS devices) and you couldn’t enable to Alexa to offer push notifications or record actual conversation; integration with other Amazon products — like fire tv — was still taking shape. On the Google front, their Home product was only released this past November. But both were investing heavily in generating mass appeal (see the Superbowl ads in early February).
Was Unfair Ecosystem Advantage staring us right in the face?
Last weekend we quietly rolled out Mylestone’s Amazon Echo Skill, and — wouldn’t you know it — our entire system lit up like one of those flipflash bulbs for old cameras. Users poured in, reporters wrote about us, perspectives were shared all over social media.
The #VoiceFirst startup @mylestoned has built one of the “why didn’t I think of that” apps for the new #VoiceFirst world. This will be big. — Brian Roemmele via Twitter
Dennis B. Keohane — in his inaugural Utterly Biased news report — called this a pivot:
…this news of Mylestone making another pivot... One could say that its a bad sign that the company is making another drastic change in what it does, which is by my count the third such pivot. Or, this can be viewed as Balter and company taking all they’ve learned from their Mylestoned experiences to bring a complete vision of the original thesis behind the company to life. I bet on the latter.
Dennis is betting right — but shifting to another ecosystem isn’t so much a pivot as it is a leap. Pivoting is when you keep twisting and turning. Shifting ecosystems is the strategy of deploying learnings to gain advantage.
Mylestone has maintained it’s reason for existing — to change the way we memorialize — but to do that, we have leapt to a new field. And on that field we can deliver on our mission by ensuring life’s most precious memories are available upon command.
That gravel hill with headwinds?
It’s leveled off to a grassy slope with the gentlest gusts of tailwinds. We are now, finally, playing with unfair ecosystem advantage.
And it feels good.
If you like what you read, ❤ it below. It’ll give us a little bit of unfair advantage.
PS: If you’re like me, you’re probably a bit curious about the whole voice assistant thing. Give it a shot. Upload some content at mylestone, and see how powerful it is to have your memories recalled upon command. And if you’re a company that wants to deliver content via this ecosystem, find us, we’d love to talk.
