Flack's Revenge

NY Media Bangs the Drum of Local Tech - Alley Now Trumps Boston

For the third week running, a major NY daily has written an article about the NY tech scene, so I figured that it is was about time for me to write something here on the topic.

I was already in a NY tech state of mind, having just attended a NY Tech Meetup last week. The meetup group is a great microcosm (or macrocosm, as it has grown quite large) of the NY tech scene. Each meeting has upwards of 800 attendees, who typically sit spellbound while taking in the evening's demos from hot NY tech startups, and get a chance to mingle and network afterwards.

This one was no different - the demos featured a mind boggling array of tech - everything from enterprise software (e.g. Foretuit which offers a great data visualization add-on to Salesforce.com), to consumer electronics and apps (Kogeto, an iPhone camera add-on which makes it possible to take panoramic videos and share them with your social networks), to the almost-too-cool-for words (e.g.Shapeways, a company that lets users manufacture and sell custom objects on-demand, via its Web site and 3D physical object "printers").

The first article ran in the NY Times: On the Move in NY's thriving Tech Sector.  It caught my attention because of some of the numbers mentioned:

According to city officials, high-tech employment in New York is... shooting up by 30 percent in the last five years, at a time when overall private-sector employment has decreased. New York recently surpassed Boston in the amount of venture capital invested in Internet start-ups, and lags behind only San Francisco.

The article described the city's ecosystem of VCs, entrepreneurs, incubators and networking groups, and moves that the city and state are making to support the growth of the tech sector.

The Wall Street Journal chimed in too, with a story, Silicon Alley Gets a Boost, about software giant Infor's move from Atlanta to NYC.  The article mentioned a shortage of office space in Chelse and Soho that is a result of heightened demand from the techies.

The Daily News wrote a nice piece just yesterday that called the R train NY's tech train (actually, it said "Silicon Subway" which makes a nice headline, but is not entirely accurate, as I am not sure if there are any chip companies here). The train line is apparently the best way to take a tour of NY's tech community. This article also cited some impressive facts and figures, and summarized the array of tech companies in NYC:

Of the 100 startups that have raised the most cash — from about $10 million to upwards of $150 million — 64 are software companies, 20 are e-commerce companies and the rest are a mix of multimedia and other firms, according to the CB Insights data.

Employment has soared. Between 2005 and 2010, the number of high-tech jobs in the city rose 30% to 90,700, up from about 70,000, according to the city’s Economic Development Corp.

And in the last quarter alone, New York-based startups raked in $831 million in 86 deals, blazing past Massachusetts for the No. 2 spot in the nation in overall venture-capital funding, behind only California.

Research Reveals Roles of MSM, Twitter and Blogs in Online Info

In this third and final installment of my series of blog posts on research about how information spreads online, I cover the latest study from Stanford University, implications and findings for the tech sector, and offer general takeaways and advice for marketers.

First, here is a quick wrap on the first two posts: In my first post I discussed an article in the New York Times that led to my initial interest and interview with Jure Leskovec, a Stanford researcher referenced in the article. The second post describes the Stanford researcher's test bed and early research. The Stanford team identified six distinct popularity curves, i.e. information dissemination patterns that were functions of what type of site broke a story.

The third study is described in the paper Modeling Information Diffusion in Implicit Networks - it builds on the earlier research. The researchers wanted to see if it was possible to infer networks of diffusion and influence without knowing about the network topology.

Taking this approach was an important breakthrough. Using the viral analogy, it is possible to track a disease outbreak by seeing who gets infected - but it is very hard to know the source of contagion and exactly who infected whom, and in what order. Similarly, in the online world, it is relatively easy to see who is "infected" with a meme - that is, you can track who mentions something - but it is hard to know whether the person was first exposed to the information by reading a blog, hearing a news cast, talking to a friend on the phone etc.

The researchers wanted to estimate a popularity curve for each media type and see if it was possible to accurately predict how a story spreads on-line based on where it first appears. So they developed algorithms that inferred underlying social networks, and also discovered that the node can have a dramatic and predictable impact on how many others mention the same thing over time.

"If you can see who mentioned the news today, we can accurately predict how many will mention it tomorrow," said Jure Leskovec, the Standford researcher. This was pretty impressive, because, as Jure said, there are a "super exponential" number of possible connections and networks; developing such an algorithm was a real breakthrough.

Of course, there are other important factors that determine how far, fast and wide a story spreads.  The researchers were careful to take into account variables such as freshness of information, novelty, and imitation - i.e. a certain number of people or sites will echo information because they see that it is becoming popular. Also, they learned that influence can vary based on the topic, and explored relative influence for technology, politics, business, sports, nation and entertainment (see the chart below).

Research Conclusions and Source Data

So what data did the researchers review, which sites were most influential, and what can we learn from their work?

My second post detailed the test bed used. In terms of this latest paper and study, the researchers explored a massive body of Web data over time - 500 million tweets and 170 million articles. They categorized sites as newspapers, professional blogs (e.g. Salon, Huffington Post) TV stations, news agencies (e.g. AP, Reuters) and personal blogs, and tracked the influence of specific sites.

The team also evaluated how influence works on Twitter. They explored adoption of hash tags over a set of 10,000 users, categorized tweeters into 100 groups of 100 users each, and ranked them based on activity and volume of followers.

Here are some specific takeaways - the following bullets are excerpted from the paper

• ...These results suggest that there are a relatively small number of media sites that have large influence on the adoption of textual phrases
• ...[They] align well with the two-step theory of information flow ... as the information and influence “flows” from the mass media through opinion leaders to the public.
• ... the influence of bloggers tends to be lower at start, but tends to last longer (in particular for entertainment and technology). This confirms the intuition that blogs tend to be echo chambers while mainstream media play the dominant force in the news cycle.
• This is further confirmed by the fact that politics, business, technology and the nation tend to be dominated by news agencies. Professional blogs are the second in terms of total influence in politics and national news, newspapers are the second in business, and personal blogs are in technology.
• ...we find the strong influence of the USA Today on technology [edging out the New York Times and Wall Street Journal] to be surprising.
• ...We find the half-life to be 32.2 hours, which... suggests that people consume news on a daily basis.
• ...we find that the mainstream media holds the most influential position in the dissemination of news content.
• ...On the other hand, hashtags on Twitter are a very different type of contagion... our results... suggest that users with the highest follower count are not the most influential in terms of information diffusion. Rather, users with the number of followers of around 1,000 tend to be most effective in diffusion and adoption of hashtags.

The bottom line for marketers? I asked Jure this and he said: "Our research lets you see the effects of online media... we are making it a hard science, that you can measure and quantify precisely... the influence curve gives you some sense, depending on what topic you have, of where you may want info to appear so the story spreads nicely."

What's Wrong with Tech Marketing - and How to Fix it (Forrester Interview)

As I blogged last week, I spoke with Dr. Thomas Grant of Forrester about a new report: Tech Marketers Pursue Antiquated Marketing Strategies. Our wide-ranging discussion covered many topics that should be of interest to Flack's Revenge readers.

The report calls technology marketers out on the carpet for being too focused on lead generation and new business.  When compared with other industries, the techies simply do not spend the time or money that they should on market research or customer relations, and do not use social media or PR to full advantage - it is instead all about big bang events, product releases and other news, and talking rather than having thoughtful conversations.

No doubt, some will wince at its conclusions, however, the report does offer suggestions for improvement.  In Part 2 of my conversation with Dr. Grant, I tried to zero in on these things, elicit examples and also find out more about ways in which tech marketers can more productively use PR and social media, and work with media and analysts.

Read on, and if this is a topic that interests you, I encourage you to visit the Forrester site as they have a selection of interesting reports that pertain to marketing.

Do companies ever make the transition (from being product-driven to market and customer-driven)?

it is wrenching... and sometimes takes disruption.

Discussion about SaaS as an example of disruption that is changing thinking

What really struck me about SaaS was that it kind knocked people for a loop... they started saying things like "Well, this isn't just a delivery model, this is a business model... we have to have a very different engagement model around our customers, we have to design our products differently."

In a way, what had happened was that they had been thrust into a very close relationship with customers that didn't exist necessarily in an on-premises world... with many layers of obfuscation between you and ultimately what people were doing with the technology... and suddenly people realized, well, damn, customers aren't just interested in things that are new, and they're not just interested in products, and they're not just interested in us as a vendor in delivering products that are new...

[This] has led people away from emphasizing too much what is new, and new leads and so forth... obviously from the statistics, not everyone is there yet.

Emphasis on the new, new thing

One of the things that companies have learned is that, [while] new is good... new is not always intrinsically and obviously valuable.   That is why the pace of innovation in the tech industry is a double-edged sword... on the one hand, it allows people to come up with things of value and deliver them to the market quickly, but often also lets them deliver things that are not of value, or not explain the value as effectively as they should because they're rushing to get it out and then they move onto the next thing.

On relatively small budgets for press and analyst relations (see chart)

The conceit that because we are developing new technology, we are defining the market, ergo there is no market research to be done is patently wrong.  Aside from the fact that not every technology [and] innovation is disruptive to that level, also, too, it is the case that you are addressing a human need; people do express their needs usually in a pretty clear fashion that you can then do market research about...

it is unfortunate that they don't tap available resources as much as they do, nor... other sources of influence... It is, especially in the B2B world, a pretty complex process... in the best of all possible worlds, you are trying to create some sort of a cascade of positive viewpoints on what you offer as a vendor that go, ultimately, into not just a press release or a piece of marketing collateral but ultimately go in a conversation between a CIO and a colleague when they sit down together... you're ultimately trying to reach that kind of conversation.

I don't think that is something the tech industry has effectively mastered... again, not just press and analysts, but other people might be important influencers... they don't get that picture too clearly.

There's an unfortunately standard model for doing analyst relations...  what analysts don't enjoy is talking to a vendor only when there's a huge announcement, and there's this carefully stage-managed conversation... frankly, the analysts have a hard time getting a word in edge-wise, because there's this gushing fire hose of information about this big new thing... that's not as effective as being in a more conversational mode with analysts....

Are tech companies under-investing in PR relative to other industries?

I think they are under-investing where PR is going... PR doesn't have to be just about announcements about new products.

One of the areas that is often misunderstood is the value of a new success story... what people look for in a success story is not necessarily what vendors think they are looking for... which is usually just validation that the vendor is wonderful.

If you are looking at PR as a conduit for information that will have an effect on a potential buyer or will help keep a customer loyal, having a story about how someone addressed a problem - even if the vendor is a minor character or not even mentioned - is still going to get my attention... 

What about tuning into vendors content on blogs and Twitter, assuming it is interesting and an area you cover you'd want to tune into that, right?

Yes... and I do, for example since I do write a lot about social media as an input into the development process, I'll follow a blog like, the social product development blog that PTC has... I've gotten to know one of the persons who posts there a lot and I have a lot of respect for what she has to say.  We're willing to follow what a social media outlet has to say regardless of whether it is a vendor or somebody else. 

We asked Cisco how has social media effected their launch process... they said, well what happens is that the spike of activity flattens out a bit, there's more conversation they have to engage in leading up to a launch event and there's actually, on the trailing side,more going on afterward... not just a "show up and throw up" event, then they rush off to the next big launch, but they have to engage over a longer time.

Forrester to Tech Marketers: Grow Up!!! (Interview with Dr. Tom Grant)

I had the opportunity to speak with Dr. Thomas Grant about a new report from Forrester: Tech Marketers Pursue Antiquated Marketing Strategies.  Handshake 2.0 blogger Anne Giles Clelland had alerted me to the study, which sounded very relevant to the client base that we serve at Fusion and Social Fluency. I asked Tom if he'd share the report and entertain some questions, and he graciously consented.

In a nutshell, the report says that technology marketers are overly product and new business-driven, under-invest in research and customer relations, and don't understand or use social media to full advantage. The last part is ironic because it was the techies that invented social media, and were among the first to flock to blogs, and news groups, bulletin boards and IRC chats before that.

It seems that tech companies show their marketing immaturity by pouring their energies and budgets into flogging new products to new customers - it is apparently all about the leads, lead, leads (the video segment above features outtakes from the great movie Glengarry Glen Ross, which was about down-in-the-luck realtors and their obsessive focus on sales leads).

I include a few excerpts of the report below, as well as from my interview with Tom. There is so much good ground we covered that I will include more details from the Q & A in a follow-up post.

Compared with other industries, B2B technology industry companies treat marketing as an opportunity to sell new products and services to new customers. For these vendors, the product is the axis around which marketing efforts turn.  The primary objective is leads.....

The high rate of potential innovation in the tech industry plays a large part in setting these priorities...The company is obliged to describe each new offering to customers, so product marketing is an ongoing concern. Appealing to new customers is a primary reason for adding products and services...

In the typical technology company, development teams sit at the heart of the organization...In this mindset, development creates value in the form of products and services. Other groups, such as sales and marketing, are merely responsible for delivering it. This chain of assumptions leads to a disproportionate emphasis on product marketing... One of those unintended costs is the tech industry’s relative indifference to market research.... 

One of the surprising results of our survey was the tech industry’s perspective on social media. While tech industry marketers talk a great deal about how social media have transformed all aspects of a company’s relationship with its customers, these same marketers treat social media primarily as a public relations channel...

The report says that technology companies can improve their marketing by taking the following steps:

Get past product marketing...

Include sustained activities more prominently in marketing metrics

Test these new strategies in social media channels

For further details I urge you to visit the link and purchase this report (others too, as it turns out Forrester has a selection of relevant reports on marketing best practices).

Q and A with Dr. Tom Grant of Forrester (Part 1)

What was the methodology?

It was a really big survey... in this case, since we were talking to both tech companies and other kinds of companies... we decided: this a great opportunity to see what distinguishes the tech industry from a marketing perspective.

How are you defining "tech?"

These are ISVs, hardware companies, services companies... people who are in the business of either producing hardware and software or whose job it is to help deploy it successfully ... there are a lot of B2B companies... but [some of the companies] do other things, it was not exclusive of B2C.

On social media (and lack of effectivenes in using it)

I've always had a gut feeling that tech companies were a little too self-congratulatory about how cutting edge they were about social media... a lot of [their ineffectiveness] does have to do with, first of all, the heavy product emphasis, [in many cases] the entire company is acculturated into thinking about products and not necessarily about the value stream from the customer's perspective. The other part of it is this emphasis on leads; if it is not a lead-generating activity, then what the hell are we doing?

It sometimes takes a very dramatic change to get out of that mode

Tomorrow: Finding a Cure (From a Scream to Market Whisperer)

Ajit Jaokar speaks out on Blogging and the State of PR

I had the opportunity to interview A list blogger (and wireless industry author, publisher and consultant) Ajit Jaokar about his views on social media and the changing nature of PR.

Ajit’s blog OpenGardens has been consistently rated as one of the top mobile blogs.  Ajit literally wrote the book on Mobile Web 2.0, is part of the Web 2.0 working group and his company Futuretext has published many important books about mobile and tech.

Ajit is very much connected with what is happening in the industry, and seems to be a one man PR machine – you can see him speaking at just about every important industry conference, and his blog and views are often cited on other blogs and in the media.

If your work touches the mobile and telecom spaces, you may well already know about Ajit.  So I’ll cut to the chase, the interview text follows:

Please share your views on the state of PR

PR has evolved quite a bit, and that is a good thing.  It’s not just the big magazines and publications, but now there are many blogs to pursue as well.

You can track people who are speaking about companies and see what the blogs are saying about clients or subjects on – if I may use that term – “long tail” publications.

Doesn’t this create an attention diffusion problem? 

That may be true, but there are also many long tail opportunities.  My blog speaks to very specific areas, and that is a key difference between what works on a blog vs. traditional media.

For example, I have been covering on-device portals, Android, open social networks, Mobile Ajax and so on.  These are very specific topics that often may have a small group of companies involved.  Issues related to device and network integration are fairly complex.  I am following this, and also feel that topics like cloud computing, and how this relates to Web 2.0 and the work companies like Google and Nokia are doing is important.

So, I believe that specialization is important – it is no longer just the broad technology categories, but sub-categories that are being followed.

Has your blog helped with the success of Futuretext? 

We were thought leaders in this space even before the blog.  I had wanted to start a magazine, but blogging achieved the same on a global level,   I started it 3.5 years ago. Today the blog has close to 800 entries.  Many of these are complex, article type entries. So, the blog has a lot of content.

The blog is a sub domain of the main site, so people who link to the blog also link to the main site.  This drives ratings in Google; it is a form of SEO and helps market every book we do.

There are also indirect benefits, as the blog positions us as being thought leaders in the space.  People have found us and our publishing company through the blog.

It helps us get feedback and do R & D.

We don't pay too much attention to comments, or to promoting the site.  Instead we focus on content, it is more important to be consistent and have clear viewpoint.  The blog has a philosophy (in Open Gardens).  It is not random; having an ethos and consistency help build audience.

So the blog has helped to market our books.  Although there is some overlap between online free content, and what winds up in the books, we have found that the blog has increased not cannibalized sales.

Also, we have found that aggregation services have helped boost our traffic – people extract our content and add it to their newsletters.

That trend is important, and we think it is really good, despite concerns by some that it is parasitic.

What Else Has Changed in PR?

Clients of PR agencies now have more options to get their viewpoints out (as opposed to previously, when they had only a few major publications).

What has been your experience in working with PR People?

Most PR people do not understand the blogging world.  I am not a journalist.  I have different personas, for instance publisher, author, PhD student etc.  I find PR companies do not look beyond the obvious – they treat bloggers as targets for their press release and expect the blogger to be a journalist/media person – which in many cases, they are not.

How do you like to receive info?

I get too many press releases.   They are generic, I take them less seriously.  I prefer to get info via direct emails.  There are few people who write well.

I read extensively online and offline.  I read BusinessWeek, and Wired when I fly, which is often.  I read Fortune and Forbes.

I use Google to track RSS feeds.  I subscribe to Techmeme, and use keywords to filter news.

What blogs / bloggers do you follow?

GigaOM, Dion Hinchcliffe, Irv Wladawsky Berger, Jonathan Schwartz, Mobile Crunch, NY Times, Google blog, Scoble, O'Reilly, Register, and Tech Crunch.

Thanks, Ajit!